tag:blog.alchemistaccelerator.com,2013:/posts Alchemist Accelerator Blog 2018-08-10T02:57:51Z Alchemist Accelerator tag:blog.alchemistaccelerator.com,2013:Post/1310212 2018-08-09T16:00:05Z 2018-08-10T02:57:51Z Seed Fundraising - How to get “Reservations” from Angel Investors


At the beginning of your seed fundraising process, you may have to wait several weeks for the first “yeses” from any investor. During this time, if you’re not getting any commitments your round can appear stagnant. Reservations from Angel investors can help solve this problem; as your round’s availability decreases it will put pressure on other investors to say yes.

Here’s how to secure the reservations:

Ask for Money

Most Angel investors turn down 90% of the meetings founders request, so if you get a meeting, you must directly ask if the investor is interested in investing.

Steps:

1. Wait until 10 minutes before the end of the meeting, then ask if they have any questions. For example:

“That’s a quick overview of AcmeCorp - do you have any questions?”

2. When you’ve completed the questions and/or when there’s 5 minutes left, ask if they want to talk more about investing. For example:

“Does AcmeCorp fit within your investment thesis?”

“Is this investment something you might like to be a part of?”

“Would you be interested in investing in our current round?”

Ask Usual Check Size

If the investor expresses interest, the next step is to find out their usual check size. This will be an integral part of the reservation later.

Steps:

1. After the investor expresses interest, ask about their investment process, as this will give you an idea of the time they take to make a decision, as well as their usual check size. For example:

“What’s your usual process for investments like this?”

2. If they don’t reveal their check size, you’ll have to ask directly. For example:

“What’s your usual check size for these investments?”

“What size of investment are you considering here?”

“Do you have a fixed amount you usually invest at this stage?”

Secure the Reservation

Once you know the investor’s potential check size and when they will decide (roughly), it’s time to secure the reservation.

Steps:

1. If the investor’s check size, decision timeline, and other requirements fit with your plan, tell them you’d be open to having them involved. For example: “I’ve enjoyed our conversation and your approach seems to fit with our current raise”

2. Next, acknowledge they will need time (and perhaps further materials) to decide and ask for the reservation. This step is critical. For example:

“Should I hold that space for you while you’re deciding?”

“I will hold your spot, to give you some time to decide.”

“I usually hold space for investors while they’re in diligence, I’ll do the same for you.”

Once you’ve promised to reserve space for an investor, it would be wrong to give that space to another investor without fair warning. Thus, your round’s availability is reduced and all other potential investors start to feel the pinch of FOMO (fear of missing out). When new investors now ask for your fundraising status, you can respond with spoken for availability for example:

“We’re raising $500k and have 50% spoken for”

Practice these phrases before the meeting, and the early part of your seed fundraising will be much easier.

Thanks to Kaego Rust for her help on this article.

About Ash Rust

Ash Rust is a Partner at Alchemist and the Managing Partner of Sterling Road. You can find more of his writing about Seed Fundraising on Medium.

About the Alchemist Accelerator
Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1304972 2018-08-02T16:05:29Z 2018-08-02T17:00:02Z An Interview with Toni Schneider, Founding Venture Partner, True Ventures

A Swiss native who studied computer science at Santa Barbara City College and Stanford University, Toni Schneider started his career as a software engineer working on NASA virtual reality simulators. He went on to become a startup founder and CEO, and an executive at Yahoo!, before joining the True team as a founding Venture Partner. Toni is well known for his role as CEO of Automattic, the company behind WordPress.com. He helped WordPress become a globally known brand that powers over 30% of all sites on the internet. For his work, Toni was recognized at the Crunchies as CEO of the year.

When he is not running one company or advising another, you can find Toni in his VW van crossing the US with his family, coaching San Francisco Little League baseball, or tinkering with old cars.

How did you get into the world of venture capital?

I got into it first as an entrepreneur and founder, raising money from VCs. I did that for three startups. Then I switched to VC while also still being CEO of a startup. True Ventures is the only VC firm I’ve ever been with. One of True’s co-founders, Phil Black, was a close friend of mine. He was thinking about starting a new VC firm and asked me if I would be interested in being part of it. So when he started True together with Jon Callaghan, I said yes and dove in to learn from them how to raise money from limited partners and make venture investments as we pulled together True’s first fund in 2006.

That’s so interesting to be on both sides. You began on the entrepreneurial side pitching to VCs and now you are a VC. How do you think that transition helped prepare you? Does it help you identify what you are looking for in a company that you want to fund? What a red flag would be, that sort of thing?

It's probably both good and bad. The good part is that I was able to bring a founder’s perspective to how we structured True. Our goal was to be very founder friendly. I could share honestly what it was like to sit on the other side of the table from a VC. That helped in creating a firm where we really think of founders and entrepreneurs as our customers and where we do everything we can to provide a good service to them.

Another advantage is that when I look at startup teams, I have a good hands on feeling for their abilities because I’ve run several startups and hired and managed many startup teams.

The disadvantage is that it comes with biases. I had a certain experience as an entrepreneur and certain things that worked for me and certain things that failed. That very much shaped my thinking around startups. While it gives me a good point of view, I also have a harder time going outside of my own experience and being open to different approaches to starting businesses.

What for you personally makes a startup look like a good idea? What is something compelling to you as a startup you would fund?

For me it always starts with the team. I look for strong founder qualities, which in my mind are the ability to be very charismatic, and to have a really exciting, big, long term vision combined with flexibility when it comes to everyday execution that's going to be very zig-zaggy for a startup. There will be new challenges every day. So you look for somebody who's comfortable asking for help and being adaptable near term, but has an audacious long term vision that they don't waver from. The charisma and communication skills will help attract a lot of people to their startup.

Finally, someone who has a lot of depth in their area of expertise. This is something I always look for. As I dig into an idea, do I feel, “Wow, this person is three steps ahead of me and has really thought it through and knows everything about the space they’re about to get into”? Any good idea is going to have more than one team chasing after it, and I want to bet on the team that has a lot of depth.

There's a lot of emphasis for future founders on idea generation, but it honestly sounds like the idea comes second to more of the team, from what I just heard you say...

First step is to be in the right place at the right time for your skillset. There are other factors that play into it, but without the right people, none of it is going to work.

The second step is the product and the idea. The product needs to be unique and truly compelling and have a story that can be articulated in a simple way. What does the product do? Who is it for? What makes it unique? It's surprising how often founders can’t answer those three basic questions in a straightforward manner. I want to invest in a product that gets me personally excited, that I believe will have a positive impact on the world, and that will make customers say, “Wow, I want that, that’s different. That’s a totally new approach.”

For the third step, like everybody else in the VC business, I look at the market. Is this something that if it works out - there can be a ton of risk associated with, frankly we want a ton of risk - but if it works out, could it be a very big business? Is it a big market that seems ready for a massive change? That has to be in place as well, otherwise you can have an amazing team with an amazing product, but without big growth and revenue potential it won’t be a VC scale opportunity. That's not what we’re in business for.

What was the number one red flag that would caution you away from investing in a team or a startup?

On the people side, it's teams that don't seem to have the right chemistry or the right understanding of what their roles are going to be, or teams that don't have a track record together. That for me is maybe not a red flag, but definitely a yellow flag.

The biggest red flag usually comes up during initial due diligence. It happens quite a bit that I'll think “Wow, this is a really good idea, I'm going to dig in,” and when I do, I realize that there are already a bunch of teams doing the same thing and the idea quickly doesn't seem so original. It feels like more of a rehash or tweak of another idea. That usually throws cold water on a project for me. That’s the biggest red flag, that an idea isn’t that unique.

It's only one percent of startups go on to become really big. You really do have to filter out ones that you don't think are capable or have a clever idea.

Yes, and even when everything fits, even when you check all the boxes that I just described, it's still hard. Because nothing ever plays out exactly the way we plan and hope. Another filter we use at True is that we focus on one type of deal. We do two to three million dollar seed rounds. That’s it. If it’s something that is a really good idea with a good team, but two to three million dollars is not enough to get it off the ground or it’s already past the seed stage, we won't do it even though it might be a great opportunity. We are really trying to stay focused on one stage of investing, do it well, and have a whole portfolio of companies that go through the same stage so they can all learn from and support each other.

Seems like True has a specific focus on seed round innovative companies, what else do you look for?

We’re not thesis investors. We don’t have certain sector or certain type of business that we look for. We’re not a “SaaS fund” or a “Crypto fund”. We invest behind great founders and then double down when things are working. For example, we were early investors in Fitbit, a couple of years before hardware startups and connected devices became a trend. We weren't looking for that trend, we just liked that team and particular idea, and when we saw it working for them, we followed on with a bunch more hardware investments like Ring and Peloton. We follow wherever our founders take us. Recently, we've invested in robots, satellites, and biotech, which are all new areas for us. We try to be very open-minded about what the subject matter might be.

You really do try to treat founders and startups that work with you very well. Is that how your fund differentiates from others? There are certainly quite a lot of VC funds around here.

One thing that makes us different is that we invest earlier than the majority of VCs. We're really close to an angel stage, but we're a full service VC firm. We are there in the very beginning, often when it’s just two or three people with an idea, and we have our founders’ backs all the way through. Most VC firms want to see revenue traction and product-market fit before they even look at something.

The second thing we do that differentiates us is we are focused on the personal needs of a founding team, not just the business needs. We know what you will need as a founder, as a leader, to get really good at your job, to get through the ups and downs of doing a startup. If something goes wrong, we want to be your first phone call. We don't want to be the kind of investor where you feel like, “Oh God, something went wrong, how do I break this to my investors? I don't want to talk to them.” We hope to have a trusted relationship so that even when things don't go well, we're going to be there and help you through it.

Part of how we do that is to connect all the founders within our portfolio and they help each other improve. That's our founder network and platform. We have events and tools that facilitate direct, open, and honest collaboration. It’s optional, but most of our founders take advantage of this amazing peer network. I think it’s super valuable and quite unique among VC firms.

What made you to want to invest in Laura and her startup, Atipica? What made them stand out from the pack of other investments you were evaluating at the time?

Laura and Atipica really hit a lot of the boxes I mentioned earlier. She’s a very charismatic founder with a big vision, a great communicator with deep knowledge in the area of diversity, inclusion and hiring. She had spent several years working on the idea and product, talking to a lot of companies about their needs, so she had depth of expertise. We started working together a little bit over two years ago. It was still early days in diversity and inclusion tools and she was well ahead of many of the people we talked to. She had a small team, pre-revenue but she already had some pilot customers. So it was the right stage for us and we felt like our seed investment could help her build out her team, get the product launched, and get to the next stage.

The hiring and recruiting sector in particular was interesting to us at the time. We had just had a successful exit to LinkedIn with Connectifier, and I was and still am on the board of another investment we made in this space called Handshake. They’re in the college recruiting space and doing very well. So I was personally excited about hiring tools and got quickly interested in Laura’s vision to make the recruiting and hiring process become more fair and inclusive and help companies understand why they're having such a hard time building diverse workforces.

Is there any piece of advice that you would give founders who are up and coming next generation founders that you don't think get shared enough currently? Something that people are failing to focus on when they're thinking, “I want to become a founder”? Is there some aspect you see time and time again they forget and you would caution them to focus on?

Try and get as much perspective as possible. When I was an entrepreneur raising money, I felt that I knew and loved my team and my business, and I could pitch them all day long. But when I went into VC meetings, I was new at it and had never heard any other pitches. On the flip side, those investors had heard tons of them, yet I had no idea how I stacked up. I've definitely seen founders come through True who think they nailed it but they didn't. And I’ve seen founders completely hit it out of the park with us and were like, “Was that OK? I have no idea!”

My advice is to connect with other founders and see other pitches, or at least get some information on how high the bar is. I think that's how you get better. Don't try just work on your own idea, on your own pitch within your own bubble, but really try and see what else is going on out there, who's doing really well and connecting. How are they doing it? What's the subject matter?

A lot of what you're describing was actually the impetus behind why Alchemist got started. The founder, Ravi, felt the same thing, a lot of startups didn't really know how to compare and weren't really swapping notes and sharing. Alchemist has become like a community where you can share ideas, help each other out and that everyone is trying to get the best out of everyone else.

Exactly. The most worthwhile part of being a part of a program like that is learning from each other and getting perspective.

Then the last thing I'm really curious about is seeing how you get to see all the upcomings startups, tech products and services. What areas do you personally think are going to be the most exciting and you are most excited about in the upcoming near future?

I get that question a lot and actually I don’t know. Literally someone will walk through the door tomorrow with an incredibly exciting idea that we couldn't anticipate. All the super interesting things we have gotten really excited about are little bit out of left field. We're trying to be truly open to new people and ideas because our next great investment can come from anywhere.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1306513 2018-07-27T22:55:03Z 2018-07-27T22:55:03Z An Interview with Laura Gomez, CEO, Atipica

Her family immigrated to America when she was eight years old and settled in the Silicon Valley area. Shortly afterwards, she got an internship with Hewlett Packard. No one at her internship looked like her, and she hated it; it made her want to stray away from tech. However, her parents — who’d come to the U.S. to make a better life for her children — saw that tech would be an incredible opportunity and pushed her daughter to continue. Determined not to let the industry make her into a victim, she decided she’d work in tech, “whether the industry embraced her or not.” She believes she made the right choice going forward with tech; now, years later, diversity is dominating the conversation in the industry. Since then, she’s worked at huge companies like Twitter and YouTube, helping them translate and localize their applications for a global audience. Her latest endeavor, Atipica, helps tech companies find and hire diverse candidates; says she’d rather fail trying to solve the problem of diversity in tech than to never tackle it. Laura has raised $2M in seed funding led by True Ventures.

In order to get a more in depth look into Atipica and the mind that created it, we conducted an exclusive one-on-one interview with the company’s founder Laura Gomez. We pushed for answers to questions that people often want to ask Silicon Valley’s next-gen entrepreneurs, but seldom have the chance. By the end of this snapshot, we hope you have a sense of this amazing founder’s story and a few lessons to take away for yourself.

What exactly is your startup bringing to the marketplace?

What we bring to clients, investors and or our own team members is thinking of AI in HR in a more thoughtful and inclusive lens, powered by data and machine learning in the workforce. While there are many tools out there for HR, we are the only ones thinking of it as a holistic, inclusive solution and building it with a diverse team.

What was the impetus behind creating your startup?

The conference I just came from was actually MC’d by a former human resources business partner at Twitter. While technically I do not have any direct HR experience, I have worked very closely with HR throughout my career. Regarding the starting idea, it began with me thinking of a thoughtful and inclusive way that we can better understand diversity at the top of the funnel so that we can apply what happens to diverse employees and what doesn’t, and try to move away from anecdotal approaches to diversity and inclusion.

What is the most challenging matter you as a startup are currently facing?

I think the biggest hurdle is people not only picturing Atipica as a solution for social impact and diversity, but seeing it as a business intelligence tool that is adaptive to the dynamics of the workforce, which includes different genders, races, ages, and other kinds of diversity. The challenge is understanding the market outside and how to position ourselves, and getting people to not just thinking it’s a social impact and diversity solution, but rather that it’s a business intelligence technology that’s helping businesses adapt to what the workforce looks like now and what the workforce will look like in 5 or 10 years.

Can you tell us a little about your background before you started your startup?

I’ve been in tech since I was seventeen. I had my first internship at Hewlett-Packard, and since then went and studied in college. I didn’t really focus on computer science because I felt a lot of the imposter syndrome. After college, I joined a lot of early stage tech companies all at various stages of growth. While working at them I saw a need for more diversity.

What previous experience or situation do you feel best equipped you for your current role?

Growing up I always had a hard time assessing myself and my skills, but I also loved languages and loved reading about and interacting with new technologies. It wasn’t until I was in my late twenties that I realized that there was a natural intersection between the two, called localization. As I continued with my interests, I realized that technology could help me assess career paths and even help companies better understand the skillsets of people. That is something I want to incorporate into Atipica as well. How are people assessing themselves, how are they intersecting their skill sets with their own mindset and passion in the long run?

If you could go back to the first day of your startup, what advice would you give yourself?

Be patient with the fundraising process. Patience in understanding the complexity of what it takes to get funding is fundamental to becoming a founder. While people do usually want to be patient and not force it, the process requires a thorough understanding. It’s really not just the waiting that’s difficult, but you need to have patience in understanding the process.

What made you apply to Alchemist? Why not others?

A former coworker from Twitter is an Alchemist alum so I decided to consider it. I started researching, and I found Alchemist was considered the best accelerator. I then reached out to a friend who knew Ravi so that they could introduce me to him. The rest is history. Since joining Alchemist I actually made one of my closest friends by going through the program. She’s also an Alum. I saw the success of Alchemist, the prestige, the thoughtfulness of the program that Ravi had built and it made me think: “This is where I want to be.”

What was the most valuable thing you took from being a part of Alchemist?

Learning how to sell to enterprises. My whole career, I had only ever sold to consumers. I think the enterprise component allowed me to better understand all the components that make up enterprises in general. Obviously there’s an emphasis on revenue, but there’s also an emphasis on positioning and on the value to the client. Being better able to see through the lens of enterprises and how they look at startups was very helpful.

Can you talk about a time in which you thought all hope was lost and how you made it through that?

It happens to founders, if not every day, at least once a week or every month. This month alone it has happened to me twice. The main one had to do with someone that I thought was going to lead my round of funding, but it just got to a point where it just didn’t seem like it was going to work out. They had their own concerns about the business, and I had my own concerns about aligning myself with their values. I think it was one of those things that should have been addressed and discussed earlier on, but those are the types of things that happen, and I learned from it and have moved on.

I personally am a big fan of acknowledging the things that I can’t control and then focusing on the things within my control, plus by doing that it helps me not go into a rabbit hole of “oh my gosh I can’t believe this happened” or “poor me” victimization. Since I’ve started focusing on that, people have noticed how much happier I am. I feel more in control of my life and my startup. Always make sure to be grateful for everything. Even for example if you meet with an investor and they decide not to invest, thank them and walk away with gratitude that they were willing to meet with you and that you were able to learn from that. Being grateful in life opens so many doors and will never hurt you.

What entrepreneurial lesson or skill took you the longest to learn or are you still learning?

All entrepreneurs, whether they know it or not, are going to face some sort of ethical dilemma. It might be who they take money from, what they’re building, who is it going to affect. I have had to learn how to handle those dilemmas and to stay true to who I am. This skill is especially important right now when we have big tech companies being held accountable for various intrusions of the democratic processes or how they’re building their product and their businesses. Practicing ethics and integrity is something that I continue to learn each and every day.

Do you have any advice for female or minority founders?

Yeah, definitely! I actually just met with a female venture capitalist this week to see if she had ever led a preemptive Series A round. I asked because I really wanted to know if it was true or if it was just my own bias, but I had never heard of a woman or a person of color that has been a part of a preemptive Series A round. That being said, I know many male founders that have recently closed preemptive rounds just by talking to an investor. I think we need to acknowledge the systematic discrimination — men can get a $10M term sheet from a coffee, but not female or underrepresented founders. How I stay balanced is knowing that I can only control my own company and my own strategy when it comes to fundraising and not any external factors like who’s getting funded and are they preemptive or not. However, if there is a trend where minority founders aren’t being treated fairly, you have to acknowledge it and hold the industry accountable.

Has there been someone that has helped you along and that you don’t think you’d be here if it wasn’t for them? How did they do it? How did you find them? How did you build that relationship?

Yes, it is a VC friend of mine named Freada. She was one of the first people I ever pitched to. When I pitched to her it was horrible. I wish I had recorded it because it was absolutely terrible. But all of the partners and associates actually gave me really great feedback. I met with her afterwards, and she told me to focus on what I really wanted to make and then to build that well and find people who are willing to buy it and then come back to them. I took her advice and seven months later met my lead investor through her. And her firm, Kapor Capital, became an investor as well. So I definitely wouldn’t be here without Freada.

Did you already know her or how did you meet her?

I didn’t know her. I actually just randomly reached out to one of the principals, who is now one of my closest friends, there at the VC firm that I kind of knew of. I reached out and I said “Hey do you have time for coffee?”, and she said yes, but asked me if I’d rather meet with her coworker Freada because she was really passionate about what I was trying to start. She eventually became my mentor and colleague and investor. As a founder, you need to be willing to just put yourself out there and ask to meet people.

What constitutes success for your startup in the next 12 months?

I want to build a company based on values, integrity, using AI and machine learning to coach people rather than trying to automate and replace people and their skill set. I want the world to know that not all tech companies are trying to replace people and that not all artificial intelligence is biased; and I really want them to know that there’s a company out there thinking of thoughtful and conducive ways to use this technology to help the current workforce.

What constitutes success for you personally?

Success for me is having a proud legacy to leave behind. No matter what happens, I have met amazing people who really believe in me and my mission. At the end of the day I’ve done great work and built something I really believe in and am proud of. I have two nieces and if they ever read about me and what I’ve done, I know they’ll be proud.

Are there any insights you have learned that you want to share with the next generation of entrepreneurs?

I would tell them to stay true to their convictions. Whatever you’re building, make sure to find a support system. Don’t think it’s a weakness or a sign of desperation to ask people for help. Make sure to ask people for support, ask for advice, ask for opportunities. I believe that most people out there are good people and are willing to help, and if they’re too busy and aren’t willing to help, then you shouldn’t take it personally. Don’t be afraid of rejections, but rather be thankful for each and every opportunity that you’ve been given, and that will make a big difference.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley — including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1303790 2018-07-19T15:50:43Z 2018-07-19T21:00:23Z Checklist for Running Your First Board Meeting


A first board meeting is a big and life changing milestone. As founders, you survived weeks of due diligence, followed by a term sheet and then a wire of a few million dollars. Now it is time to be a CEO and experience and run your first board meeting with the investor or investors who sit on your board and blessed the deal.

It can be overwhelming. Here are a few coaching tips, based on my experience as a board member, to help first time CEOs be prepared and maximize the limited time you have with your board.

Checklist For Your First Board Meeting:

  • Get On Calendars: Executives’ calendars fill up months in advance. Remember that you are asking for 3 hours of a partner’s time, several times a year. In some cases, investors will have to fly in for the meeting. As a best practice, ask one of your board members’ administrative staff to own responsibility for scheduling the meetings.

  • Pick the Best Dates: The board meeting should take place after the quarter ends. This gives your finance and sales team enough time to close the quarter, giving the complete picture of sales data. Your cash runway is a key metric. Missing one deal could have a big impact. Having board meetings after the end of the quarter ensures you have the actual bookings number. (Note: most boards also have standing calls during the quarter.)

  • Share Decks: Email your board decks at least 72 hours in advance. This will help the board be prepared to ask meaningful questions and give feedback. Board members might also request that you pull additional information for the meeting. Emailing decks ahead of time gives you and your leadership team a few extra days to meet any such requests.

  • Use the Preferred Template: Ask the lead investor if they have a template that they would like you to follow. Chances are they sit on multiple boards and have a preference how they like to review the data. Once you have the template, share it with your leadership team. Have them fill out their section. For example, Sales, Finance, Product, Operations will each have their own slide or slides. Each section should start with a high-level overview of the insights and learnings of the quarter.

  • Prioritize Board Discussion: Always have two or three meaningful topics that you want to discuss with the board. Interact with the board as you prepare your slides. They are a sounding board for what you want to cover. Remember they have done this before and can only help when they know what problems you are trying to solve.

  • Leave Time for Governance: At the end of each board meeting, you will do the housekeeping: approve stock grants, minutes and other items that the board needs to vote on. Always have the most current cap table handy. That gives the board perspective on the impact on the employee option pool as they approve grants.

  • Hold a Dress Rehearsal: 24 hours before your board meeting, meet with your leadership team and do a dress rehearsal. It is important that everyone is on the same page. This might be the first board meeting for them as well.

  • Take a Breath: Congratulations on making it this far! Give yourself and your team the credit you deserve for the huge milestones of a Series A raise and first board meeting. There’s a vast amount of work ahead, but this is an achievement to celebrate.

About Darren Kaplan

Darren Kaplan is the co-founder and founding CEO of hiQ Labs (www.hiqlabs.com), a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator mentor, working with Augmented Reality, Cyber Security, and HR enterprise SaaS startups.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1296323 2018-06-28T14:55:33Z 2018-06-28T14:55:33Z Using Design to Inspire Disruptive Thinking

Image result for design principles

Emotion factors into customer experience, and as a result, into purchasing decisions. A customer’s experience isn’t just about features, it also includes how the product or experience makes them feel. It’s the moments of delight a customer encounters, and also the overall feeling they take away after interacting with your product.

Great customer experience is why travelers opted for Virgin America when United and American Airlines offered more flights per day. The Virgin experience, and the brand’s unique personality was ultimately more appealing than other airlines’ “feature” set

Investing in design to create an experience, rather than just a product and feature set, can be a key element of a company’s success.

Design is empathetic

Design can be seen as abstract concept. Robert Brummer, industrial designer and founder of SF-based design studio Ammunition has said: “Everyone is a designer.” What he means is that all of the people involved in bringing a product to life (the engineer, the manufacturer, the product manager...) need to be bought in to the design vision since they’re executing on different parts of this shared strategy.

Empathy is critical for design success. When you understand the context of a product's use (and how the person using it feels), you make really important discoveries. Understanding your users doesn’t just mean interviewing them––observation can be even more revealing. Observations uncover insights that interviews may not because users will often tell you how a process is supposed to work, rather than show you how it actually works.

To ensure that every decision reflects the best user experience, startups can keep these key principles in mind:

Five Key Principles

  1. Make it simple – Find a way to make someone's life easier, and maintain your focus there. It takes discipline to keep things simple, but focusing on doing one key thing really well could be a differentiator.

  2. Inspire delight – Create efficiency around a pain point. Help users complete something in an engaging and compelling way.  

  3. Exhibit craftsmanship – Pay attention to details. Think about going to a Disney resort:you instantly become part of a crafted, well-orchestrated experience.

  4. Deliver unique value – Avoid getting trapped in incremental improvement. Be sure you're focused on doing something unique and different. The NEST thermostat is a great reminder that there are opportunities for  breakthrough innovation even for everyday household objects.

  5. Focus on human goals – Understand your customer's world. Take time to understand who your users are.Don't trust internal opinions only because your perspective may not reflect the greater population.

A design-focused process

Design-driven companies use collaborative teams to get to disruptive ideas faster. Product management, product marketing, and design  should work together from day one. Here’s an outline of a development process that puts your users first:

  • Discovery – Focus on your customer development work to uncover your users’ needs first.

  • Conceptual design – Use the data you discovered to ideate upon possibilities.

  • Detailed design – Narrow your scope. Sketching, wireframing and prototyping, and then sharing these prototypes can help you get specific and disrupt assumptions.

  • Implementation – Discuss tradeoffs and ensure that with every change you’re not compromising the overall experience.

  • Post ship – Go back and talk to your users again. You may find new opportunities for the next version.

Find the right people

For small companies unaccustomed to hiring designers (and other user experience professionals like researchers, prototypers, or writers), finding the right people can be challenging. Design is an iterative process, so whomever you hire should be willing and able to work with you through a development process, listen to feedback, and make changes.

Communication is key. Your designer should be able to answer questions about why they made certain decisions, communicate to you why the overall design proposal works, and, as noted before, take constructive feedback. There’s lots of talented new grads and contractors who’d be motivated to work with startups and small companies. Working with a company where design is a priority at the earliest stages of growth should be an attractive prospect for designers. The benefits gained from designing an overall customer experience should prove invaluable to your business.

About Catherine Courage

Catherine serves as Vice President of Ads & Commerce User Experience at Google Inc. She was previously SVP of Customer Experience at Citrix Systems, Inc. where she led the company-wide customer experience initiative with responsibilities covering brand, social, web, product design, information experience and business process reinvention all to drive adoption and loyalty among customers, partners, and employees. She also served as SVP of Customer Experience of DocuSign, Inc. and the Founding Member of the experience team at Salesforce.com. She has twice been recognized by Silicon Valley Business Journal as one of 2011's 40 under 40 and 2013's Women of Influence. Ms. Courage holds a Masters of Applied Sciences, specializing in Human Factors, from the University of Toronto and Bachelor of Science from Memorial University of Newfoundland.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures/year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1295945 2018-06-21T13:48:16Z 2018-06-21T18:45:54Z Emotional Triggers and Investing

Directors like James Cameron, James L. Brooks, and Steven Spielberg are masters when it comes to understanding human emotion. In just a few short scenes, they can leave a whole audience in tears. They aren’t doing anything magical. They’re just appealing to the same human emotions we all have. As an Alchemist Accelerator Partner, I teach founders how to apply the same principles to fundraising. Get an investor emotionally excited and investment comes naturally. Try to beat them to death with numbers and figures, and you’ll just spin your wheels. Investors see thousands of pitches a year and fund a handful. If you want to win, you have to get them excited and snap them out of their default behavior of “no.”

Luckily for founders, investors are human too. So naturally, they have common emotional triggers that spark excitement, and ultimately, investment. In working with hundreds of founders, as well as raising $5.4million in seed funding for my own startup, I’ve identified eight emotional triggers nearly all investors respond to. By focusing on conveying these points to prospective investors, founders stand much better chances of raising capital and ultimately building great businesses.

The eight emotional triggers are:

  • Big Market

  • Rapid Growth

  • Why Now?

  • Unfair Advantages

  • Founder Strength

  • Founder Bond

  • FOMO

  • Confidence

Big Market

Investors live and die by their returns. The only way to get big returns is to invest in companies that have potential for big exits. For most investors, big market is a fairly binary measure: “Is the TAM (total addressable market) large enough to get me outsized returns on my investment?” they’ll be thinking. If the TAM is over $2B, you’ll get a check and if it’s less than $2B, they’ll likely have to pass—even if they really like you. So make sure you help your investors know exactly how big your market is by helping them do the math. If an investor is asking questions about how many customers are in your space or how big you think the market is, don't make them guess at the answers. Give them all the data they need to help them understand the TAM. This is especially important if there's a general perception your market may be too small.

Rapid Growth

The only thing that separates a startup from a small business is rapid growth. It’s literally the definition of a startup. The easiest way to demonstrate a rapidly growing company is to, of course, be growing rapidly, which typically means you’re adding users, customers, or revenue quickly. However, if you’re pre-revenue or pre-launch, growth projections can also help to convince an investor that your business is about to take off. If you've done the work in Excel to know you're adopting the best business model, now is the time to use it to convince someone else.

Why Now?

The why now question is really a two-part question of movement. Why has this business never been possible until now? What has changed now to make this business possible for the first time? After all, fresh ideas are nearly impossible so chances are others have come before you and failed. You need to explain what has changed that will make your vision succeed. Market movement creates opportunity. You see it. They see it, but only you know how your business can best seize the opportunity to create billions more for the benefit of both of your organizations.

Unfair Advantages

Investors recognize there are lots of smart people in the world, so becoming a successful company in a crowded marketplace requires more than just efficient execution. Describe precisely how you're creating a new earnings engine as well as any unfair advantages you may have. For example, if you have extreme domain knowledge around analyzing very large datasets or have worked in the industry you're targeting with your new product (e.g., healthcare), you should highlight that in your pitch.

Founder Strength

Building any successful company is hard. Building a multi-billion dollar company is nearly impossibly hard. When investors invest in your business, they can’t just believe in your idea. They have to believe in YOU. The best way to convince them is to show them a history of exceptional achievements. For example, if you have a new security technology, are you already an inventor holding patents or do you have a CISSP? Name drop. Make connections to your market. Mention achievements and show off logos. Be sure to share all of your founding team strengths.

Founder Bond

Co-founder conflicts are among the top reasons startups fail. It’s not talked about every day on TechCrunch, but investors see it all the time in their portfolios. So when a potential investor asks, “How did you and your co-founder meet?” he or she actually doesn’t really care about your cute story of growing up together and your mutual admiration of Pokemon. What the investor really wants to know is if you and your co-founder are committed to each other enough to stick it out through the ups and the inevitable downs of startup life. Founders who have bonded because they've known each other awhile often have an edge because (presumably) their relationship has already weathered some turbulence.

Fear of Missing Out (FOMO)

In the public markets, investors pay big money for the privilege of investing in stocks at a future date, at a current known price. It’s called option trading and it’s a multi-billion dollar market in the U.S. alone. In the private market, investors get “free options” all day by telling founders simple things like “We’re still discussing things internally” or “We’re still working through diligence items.” As a founder, it’s your job to move these maybes to real answers. The best way to do this is by appealing to what we all fear, which is missing out on something that might be amazing.

Confidence  

Investors are looking for founders with confidence. After all, if you aren’t confident in your own business, why should the investor be confident in your ability to make it successful? One of my fundraising mentors, Michael Carter, used to remind me, “It’s your job to be confident.” That haunted me during my own fundraising process, but it also provided a healthy reminder that confidence isn’t an emotion. It’s something you can project through tone, body language, and deliberate actions—even if deep down inside you feel anything but confident.

Emotion stays with us, making the discovery of the right human connection a significant factor in an evolving investment strategy. Talk. Uncover. Discover. Emotional triggers have the power to accelerate your funding success.


About Michia Rohrssen

Michia Rohrssen

Michia Rohrssen is the CEO of Prodigy, the fastest growing auto startup. He is also a founder/blogger at B2BFounder.com, providing actionable insights from a founder in the trenches. Before Prodigy, he served as Head of Growth at VentureBeat and CEO of Smarter Solutions. Learn more at https://getprodigy.com.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1291462 2018-06-08T04:00:00Z 2018-06-07T14:50:33Z Crossing the Chasm and Spinning Up the Web

Innovation has been difficult for traditionally successful companies. While leaders such as Intel, Oracle, and Microsoft spent time improving performance, entrepreneurial founders from Facebook, Google, and others moved in, creating new earnings engines by delivering faster and with less friction.

When I speak with Alchemist Accelerator entrepreneurs, I first describe the hierarchy of powers because it's how investors think about the origins of future growth. They want to understand how your company is going to win based on what power it will exert on the market:

  • Category power - Growth from category expansion where secular growth increases spending

  • Company power - Growth from competitive advantage (e.g., the 800-pound gorilla analogy)

  • Market power - Growth born from customer commitment and loyalty (think: Mac owners of the 1990s)

  • Offer power - Growth born from unmatchable offers

  • Execution power - Growth born from reaching tipping points

This last point -- reaching the tipping point -- is what founders delivering consumer technologies have to focus on just as business-to-business (b2b) startups have to put all of their energies into crossing the chasm. Each is a critical step to becoming a successful business or what accountants commonly refer to as a “going concern.”

Crossing the Chasm

When I introduced Crossing the Chasm in 1991, the idea of a technology adoption life cycle with different categories of enterprise technology buyers was novel. Now, most b2b founders recognize the value of aligning their businesses with innovators and early adopters (a.k.a. lighthouse customers).

At the same time, they realize reaching beyond those groups to the early majority is much more demanding, and can sometimes feel like a futile exercise similar to poor Sisyphus pushing his boulder up the hill. Yet when they find pragmatists, or what I refer to as a "bowling alley" group of users that share similar pain points, the business can successfully cross the chasm to “viable” and enter the tornado phase, when it seems everyone--from techies to Main Street conservatives-- purchase. After all, adoption is social, so the skeptics come along too, and that's when you have total assimilation.

Spinning Up the Web

Interestingly b2c companies don't cross a chasm, but rather spin up a motor with a variety of gears to generate a tornado. Two gears -- acquisition and monetization -- were what early investors questioned most. How were companies running experiments and based on results, tweaking accordingly. However, the other two--engaging traffic and enlistment behavior--have turned out to be longer-term predictors of success. “Spinning up the web” or a mobile app today requires viral engagement. When Net Promoter scores reach 9 and 10, you know you have a winner.

While not impossible, crossing the chasm or spinning up the web within a traditional business is hard because innovation can be distracting and require reassigning top talent. You, as an entrepreneur, can use their continued focus on performance to your advantage, executing on one of the framework powers to grow your business or be acquired by theirs. Getting traditional enterprises to effectively create new earnings engines is outlined in Zone to Win. For now though, startups like yours that can cross the chasm or spin up the web still have the edge.

About Geoffrey Moore

Geoffrey Moore is an author, speaker, and advisor who splits his consulting time between start-up companies in the Mohr Davidow and Wildcat Venture Partners portfolios and established high-tech enterprises, most recently including Salesforce, Microsoft, Intel, Box, Aruba, Cognizant, and Rackspace. Moore’s life’s work has focused on the market dynamics surrounding disruptive innovations. His first book, Crossing the Chasm, focuses on the challenges start-up companies face transitioning from early adopting to mainstream customers. It has sold more than a million copies, and its third edition has been revised such that the majority of its examples and case studies reference companies come to prominence from the past decade. Moore’s most recent work, Zone to Win, addresses the challenge large enterprises face when embracing disruptive innovations, even when it is in their best interests to do so. It’s time to stop explaining why they don’t and start explaining how they can. This has been the basis of much of his recent consulting.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1286848 2018-05-25T04:00:00Z 2018-06-06T20:18:59Z You Need Paying Customers, Not Free POCs, to Survive Your Fundraise

First-time entrepreneurs that are building an enterprise SaaS company and trying to raise money without having paying customers will typically find it difficult to raise capital. As an Alchemist Accelerator CEO mentor, I help founders understand this point as early as possible. If you want to survive, meaning close your Angel or Series A round to live another day, you must prove that customers will pay for a solution to the problem you are solving. That is table stakes in Silicon Valley.

Early Stage, SaaS, Enterprise Sales is Really, Really Difficult.

You don’t have brand recognition, customer references, case studies, engaging slides, or a fully functional product. And most technical co-founders do not have sales experience and would prefer to spend their time coding versus updating salesforce or talking to people.

Capital comes in two primary forms: paying customers and venture term sheets. Non-paying “proofs of concept” (POCs) are not customers. The Valley VC deal flow is massive so POCs with no path to revenue from small logos (companies with under 400 employees) will get a response that sounds like “come back in six months.” That is a major problem when you have only 90 days of cash and no salespeople.

Founders need to clearly understand their prospects’ buying and decision-making processes. Everyone knows your product is in beta, but you shouldn’t be giving it away for free. Founders need to know their worth and show the value of their products. It’s important to explain to early prospects that free trials equate to no funding to hire engineers to scale the product. Even worse, they lead away from a path to raise money.

Be honest with your first 10 potential customers. Let them know that you need a financial commitment from them and that they need to be a reference for potential investors. Listen carefully to their feedback when you make that ask. Do they have a budget to pilot new technologies? What are the barriers to your deal getting signed in the current quarter? Are they in the midst of a reorganization? Did a new boss just arrive? The signal will be high on your first call as to whether or not this lead has real potential. If a prospect tells you his or her company’s security assessment will take six months and the purchasing process another three months, believe that person and say thank you, don’t forecast them and then move to the next deal.

Your First 10 Logos Matter

Many founders sell into small businesses (20 – 400 employees) because they think the process will be easier. Logos matter and the first customers you attract are important. VCs call these lighthouse customers. They represent early market validation and big budgets. If investors have never heard of the logos on your traction slide, there’s little excitement to listen to your pitch. Similarly, if your first four customers are due to your friends or family network, investors will be

skeptical of your ability to cold call and introduce your new product/service in a compelling way outside of your immediate contacts. Remember VCs backchannel before they cut checks. They call their networks of lighthouse executives to get a sense of market needs.

Have A Path to Scale Early Customers

Investors will be interested in your traction. They know that your first few deals will be priced below market to get the relationship started. But you need to show them a path—how you are going to grow early customers from five-figure deals to six-figure deals. (In effect, showing now that you won your first deal to prove your value with one business line, how you will get the rest of the business.) Great founders set this path to scale at the earliest stage of deal. They do this by value setting at the beginning of the relationship.

So take the time to build a solid pipeline of customers not POCs. It’s easier to raise money when you have paying customers. Founders selling early-stage enterprise SaaS solutions should think in these terms: every $50K SaaS sales order should equal $300K in funding. If what you are selling has value, people will pay for it.

About Darren Kaplan

Darren Kaplan is the co-founder and founding CEO of hiQ Labs (www.hiqlabs.com), a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator mentor, working with Augmented Reality, Cyber Security, and HR enterprise SaaS startups.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1281987 2018-05-17T15:29:12Z 2018-05-17T16:00:01Z Lighthouse Customers: Four Best Practices


A lighthouse is a great metaphor, symbolizing safe passage ahead. Throughout my career, I've associated it with really important customers because they're the ones that help safely navigate small startups into burgeoning businesses.

Lighthouse customers are similar to anchor tenants in a shopping center. Others follow their lead. Lighthouse customers are your company’s champions (and hopefully become members of your Advisory Council). Lighthouse customers support your vision and have tremendous influence on your product or service roadmap because they've committed to you and you've committed to them. You’ll have other customers, for sure, but these lighthouse accounts are the shining examples of your software and service in action. They’ll be your references to investors. They’ll speak to analysts and press. They are your showcases.

That said, they don’t all have to be from the same industry. However, they do have to share the pain points your business is solving.

When it comes to lighthouse accounts, here are four things I tell the Alchemist Accelerator startups that I mentor to keep in mind:

1.     You're forming a partnership that requires commitment on both sides.

2.     Find big names that can be “company makers.”

3.     A solid ‘how many’ rule of thumb is 1:1.

4.     Companies do change.

Both Sides Commit to the Partnership

In the era of subscription selling, it's more important than ever for you to have happy and satisfied customers. Lighthouse accounts provide an inside view into what prospects and customers really need and what your organization is doing (and can do better) to deliver.

For your part, your company will need to provide direct access to your CEO as well as establish a dedicated support team. Best practices with lighthouse customers include

·      Monthly check-ins between executives

·      Quarterly in-person, on-site meetings at either the customer or company location

·      Bi-monthly meetings with clearly defined action items by team

·      Weekly internal email updates about lighthouse customer progress

Recognizing the importance of these key accounts, some startups showcase lighthouse customer logos on their walls. Others host lunch & learns about the customers' businesses, hearing from champions, investors, influencers, and even media presenters.

But the relationship can’t be one-sided.

Lighthouses have to commit, too, meaning they should allocate executive access and provide significant input to your roadmap, but without too many absolute demands. There’s also financial equitability. Lighthouse accounts should pay for what they use, with the exception of possible discounting in exchange for specific marketing activities, such as quotes in press releases or speaking engagements at industry events. Remember, our companies charge customers for our software and services because nothing should be free when you’re providing a valuable service or product.

Find Big Names that Can Be “Company Makers”

Lighthouse customers should be well-recognized brands. It may not be widely known, but forward-looking companies across industries -- think Starbucks and Target, VISA and Mastercard, JPMorgan Chase and PNC, for example -- want to work with you as much as you want to work with them. Global giants stay ahead of competitors by finding ways and new technologies that improve processes, increase customer engagement, drive revenue, and reduce costs. If you have something that can give them an edge, they’re interested.

Association with a few big brands puts a company on the map. Lighthouse accounts not only open doors, they offer tremendous opportunities for the kind of high-scale growth that can make a company wildly successful. Teaming with the right internal champion can turn an initial 50-seat sale into an enterprise-wide deal.

1:1 is the Ideal Executive Ratio

Too many and there's no way to support them. Too few and you don't have enough feedback to improve your product/service nor investor references to continue building. Lighthouse accounts should be the best example use cases of your software or service, making them the most strategic to your company. That’s why each lighthouse account must have a company executive sponsor, leading the relationship to greater success. The ideal ratio for lighthouse accounts is one executive from your company to each lighthouse customer organization. That basically means if you have five execs in your company including the CEO, you can handle five total lighthouse accounts.

Embrace Change

It doesn't have to be the end of either business if a lighthouse customer relationship dwindles. Change is constant. Some companies advance faster than others and timing is everything. Should the bright light of one customer begin to fade, be sure to replace it with another. This goes for both startups and global Fortune 100 companies. There should never be a time when employees don't know the name of your company's lighthouse customers.

Lighthouse accounts help companies of all sizes, across industries, safely navigate forward. They keep teams innovative and competitive. Who are your company's lighthouse customers? It's important for you and everyone else in your business to know.

About Kris Duggan

Kris Duggan is an entrepreneur, advisor, investor, and educator. He's advised and invested in a variety of Silicon Valley-based companies, including Palantir Technologies, RelateIQ (acquired by Salesforce.com), Addepar, Blend Labs, Turo, and Gusto. He co-founded and was the founding CEO of Badgeville and BetterWorks before co-founding a new technology company, based in Palo Alto, CA, this year. Kris is the Chief Sales Mentor at the Alchemist Accelerator. He previously served as an Adjunct Faculty for Singularity University, and is a frequent speaker on the topics of scaling startups, customer loyalty, gamification, employee engagement, and performance management.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1282723 2018-05-12T07:04:46Z 2018-05-31T20:18:42Z What’s HQ (Hustle Quotient) And Do You Have Enough Of It?

Hustle isn’t just the difference between good and great: for start-ups, it’s the difference between existence and non-existence, between “good enough” and “gone”. Companies in an industry will experience roughly the same degree of luck. Hustle is what makes the most out of good luck and sidesteps and perseveres through the worst luck. HQ, your Hustle Quotient, is how effectively you leverage your IQ and EQ. Hustle is a resource available to all, and this article explains 6 ways to increase your startup’s HQ. The article also explains the interaction of HQ with social, financial and human capital; and in what way HQ supports anti-fragile companies. Concepts are illustrated via examples from history and industry.

In my experience, one factor — a factor available to anyone — opens the door to success for startups: Hustle — the difference between existence and non-existence. Hustle has to be your guiding compass.

Your organization’s HQ, its Hustle Quotient, measures your perseverance and resourcefulness. HQ is how effectively you leverage your IQ and EQ.

It’s not new. Here’s a life-and-death example of HQ outside the realm of this century’s technology startups.  More than 100 years ago Amundsen and Scott led two separate expeditions in a race to be the first to reach the South Pole. Presumably, their goal was to also return from the expedition.  Amundsen reached the pole first, and he returned with every member of his expedition. Scott and his entire team perished and likely did not reach their goal. The difference in outcome — existence vs. non-existence — boils down to hustle.

Amundsen insisted on 20 miles a day, no matter the conditions, and he never went more that 20 even in great conditions. Scott rested on bad days and covered as much ground as possible on good days. Both teams had roughly the same conditions, but their outcomes were vastly different. Amundsen covered twice as much ground — returning from the expedition. Existence vs. non-existence.

Amundsen had broad contingency plans — literally. He carried three times the supplies that he calculated were needed, and he marked the caches with a 10km band of flags so he wouldn’t miss them. Scott carried the exact amount needed, and planted a single flag for each. Amundsen’s team was fed; Scott’s experienced starvation. Existence vs. non-existence.

Amundsen researched how the Inuit lived in order to understand the problems he would encounter. Scott knew how to use horses, so he used horses—which were not able to survive the conditions.

Three HQ lessons from these expeditions:

  1. Persevere through periods of bad conditions
  2. Contingency plans enable you to persevere
  3. Understand the problems before you choose your solution

A start-up adventure has striking similarities to the Antarctic expeditions, though not that fatal consequences of failure. There are many unknowns, but a bright north star: becoming a billion-dollar company. Startup companies have, on average, similar resources and luck. Hustle is what you make of the good luck, and how you persevere during the bad. Contingency planning gives you the backup you need to survive when the goal takes so much longer to reach than you expected, to endure during the bad luck, and as you navigate the unknowns. In a startup, you can’t dream in a vacuum — you have to address how to solve a real problem. Just as Amundsen created solutions correct for Antarctic conditions, startups must understand the market needs, headwinds, and pinpoints. Outcomes are also similar: existence or non-existence.

Here’s a Hustle example from the technology world: Imagine Larry Page steps on the elevator with you. You could be immediately star-struck and ask for an autograph, while expressing admiration for his accomplishments. Or you could engage him in a conversation that shows off your chops: “BTW I was at the GoogleNext conference last month, and it brought home to me that Google is really giving AWS a run for the money.” Larry is now compelled to say, politely, “Oh, thanks. So, what is it you do (that brought you to the conference)?” You use your HQ to deliver an answer gets his interest, and he agrees to connect with you. Now, although you don’t have an autograph, you do have potential to establish a relationship with Google. This IQ leveraged by hustle.

Anyone and any organization can have hustle. It is a renewable resource with no marginal cost.

So how do you get that hustle, or evaluate your HQ?

  1. Force yourself into uncomfortable situations, outside your comfort zone. Such as promoting your company even when it feels unbearably awkward.
  2. Work on things that truly move the company forward. For example, making 20 prospect calls. You’ll probably have to be uncomfortable — overcoming the feeling of failure that prospecting often brings, which is really overcoming yourself.
  3. Hire people with high HQ. Make HQ central to the interview. What have you done outside your comfort zone, or that’s risky, or leaps into the unknown. You must hire the hustle mindset and behavior, not the job skill set.
  4. Create a culture of tinkering. The route to success is faster if you try over and over, experimenting and learning until you find solutions.
  5. Create options where none exist. If you are prospecting, and get no response, what do you do? High HQ  people brainstorm on how to get a response. Who else could reach my prospect? How can I get near my prospect? How can I create more prospects?
  6. Do not accept binary outcomes. You reached your prospect and delivered your most persuasive arguments, yet you got turned down. Don’t react as if the outcome is Yes or No. You got a No to your offer, so now you ask  “What happened? Why not? What would have led to Yes? Who do you know who might want to use us?” Answers to any of those questions put you far ahead of where you were after No.   

High HQ teams make more of their startup capital. Startup capital is the combination of your social, human, and financial capitals. Financial capital is your buffer for hard times. Human capital is the skills and experience you collectively have. And social capital is your network in the industry you are in. Hustle makes you assess what you can do with your capital. How many people in cloud computing do you know, or how many people in your network know people in cloud computing? What are the gaps in your network? How will you fill those in? Our human world operates within clans or tribes. Hustle is identifying groups that are critical to your success, making sure you invest time and energy in becoming an integral part of them and using them effectively.

As you apply your elevated HQ to your organization, keep your scope broad. Company building is not product building. Product is only one of the variables to manage. The others include finance, advisors, investors, co-founders, talent customers, legal, HR, and partners. Some of these you can select based on their HQ. Some, like co-founders, advisors, and partners, will complement what you do, filling in for your organization’s gaps. It’s all about existence or non-existence.

This manifesto is a result of my constant research into what drives success.  I’ll share my reading list with anyone who reaches out to me.

About Asim Razzaq

Asim Razzaq is the co-founder and CEO of YotaScale. Prior to YotaScale, Asim was Senior Director of Engineering at PayPal and eBay. He built and ran the PayPal cloud infrastructure and his engineering teams made significant innovations in the area of manageability and system administration. He helped build the PayPal Developer Platform from zero to a billion dollars in payments volume. Asim was also responsible for all core infrastructure at PayPal processing 5 million transactions per day. He has lead engineering for multiple early and late stage startups in Silicon Valley and Austin with two of the companies exiting to Netsuite and Navitaire. 

Asim co-founded YotaScale to bring his expertise in large scale, mission-critical, cloud infrastructure management to companies beginning to use cloud services as well as those that are well on their way.

Asim holds a BS (Honors) degree in computer science from the University of Texas at Austin where he conducted research in distributed computing and large scale infrastructure sponsored by IBM Research. He is a published author in the field of computer science in the area of resource management for large scale, distributed systems.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1281660 2018-05-10T14:53:56Z 2018-05-10T16:00:03Z Demo Day Advice - From a VC Turned Entrepreneur

Entrepreneurs - congratulations on approaching Demo Day!  You'll soon be surrounded by interesting people, inundated by emails, and distracted by countless potential conversations that you'll need to prioritize carefully.  Based on several years of experience and more than a handful of “Demo Days”, including the Alchemist Accelerator’s, here are a couple of tips I hope you’ll find useful:

1)  Remember that 5 Minute Demo Day presentations are NOT enough time for listeners to decide whether to invest or not.  Your goal for the Demo Day presentations, therefore, is to attract the attention and trigger the NEXT CONVERSATIONS with the individuals in the audience that could be the best sources of feedback / investment ($) / advice / or customer introductions.

  • Sometimes all of these dimensions happen at once, usually feedback and "advice" happens first as a precursor to investment or introductions.
  • None of these dimensions, however, will happen if the listener (for whatever reason) decides they are not interested in having a follow-up conversation.
  • If you think someone or some firm could be a good fit for you, then be proactive in getting their attention.

2)  The demo day presentations are only 5 minutes, if not shorter!  The short format requires you to present in "broad brush strokes" that capture the most important highlights.  Prioritize what content to present and what details to highlight most efficiently.

  • Sometimes the slides you create for "full" 30/60 minute conversations with investors are good ones to reuse.  More frequently, it helps to edit and consolidate top-level takeaways or "aha moments".
  • Pay special attention to feedback from listeners who are hearing your pitches for the first time, domain experts who know your space, and non-experts who don’t know your space.  Each of them will give you different types of feedback, and you'll need to decide who to optimize for carefully.

3)  From my experience as a VC and angel investor, the most important questions to address within an abbreviated Demo Day pitch to trigger follow-ups from the right prospective investors are as follows:  
a.  Why now?

  • Compelling answers to this usually involve something significant changing in the market, with new/different customers or pain points that are growing, or new technology breakthroughs enabling problems to be solved, or something else encouraging different behaviors (such as government regulation or customer psychology).  
  • All of you are smart and talented.  Articulate (in simple terms to someone who is not an expert in your field) why you are excited and passionate enough to be dedicating your life to your companies right now.

b.  Why you?

  • The big opportunities and major inflection points across industries will be discovered by several, (usually many) different teams. What makes your insights unique or authentic?  
  • What experience or exposure do you have to the domain?  Have you or your co-founders been entrepreneurs before, or have you had other exceptional experiences in your life that will make you succeed when others give up?

c.  Target Market.

  • What subset of the market and subset of customers are you going to start targeting first, and how big can that "slice of the pie" get as you grow your product / team / business?  
  • Most VC's focus and talk about Billion dollar markets because its difficult to build large businesses in small markets, but it's rare that new products and new companies can target actual Billion dollar markets from the start.  Usually, whether limited by feature set, market awareness, or geography, most startups have to start by focusing on small pieces of big markets to grow into bigger markets and bigger companies.
  • I prefer to see a tighter focus and deeper understanding of smaller markets as precursors to bigger / quickly expanding markets rather than claims to HUGE markets that are crowded with competition or demonstrate lack of focus or deep understanding of target customers.

    d.  Product (or service). What are you building, creating, or enabling?

    • A single sentence that clearly articulates (again in simple terms that someone who is not an expert in your field can understand) is best.  That single sentence will keep evolving, and it will require more detail when you explain it to people with domain expertise. Even so, you should aim to distill the core trajectory of your company into to a single sentence that can be remembered.
    • What signs of customer validation, or market adoption, or business potential do you have?

    e.  Differentiation. What is defensible now and into the future?

    • What is the strategy for expanding, and what will become the more UNIQUE and compelling dimensions to your product offering vs. inevitable competition?
    • Are you 2x better or 10x better than the alternatives? Across what dimensions and subject to what assumptions?

    e.  Business Model.

    • At the seed stage you don’t need to have the world’s most comprehensive business model, nor a combination of 3 different business models.  You do, however, need to have some ideas on how you might start to capture the value or benefits that you provide.
    • Again, what signs of customer validation or business potential do you see? Deep understanding of how much customers are paying for alternatives, or inferior solutions, or notable competitors in the market are good proxies.

    Overall, strong Demo Day presentations usually weigh heavily towards addressing <Why now> + <Why you> + <Target Market>, with lighter treatments of <Product> + <Differentiation> + <Business Model> (due to time constraints).  Follow-up conversations, and deeper diligence from potential investors will go deeper into the areas of <Why you> + <Product> + <Differentiation> + <Business Model>.
    You can identify individuals/VCs who are a better "fit" for you on the basis of how well they already understand <Why now> + <Target Market>, and how deep they can dive into discussing the other areas. Individuals/VCs who don’t already share your opinions regarding the <Why now> and who don’t ask thoughtful questions about the other areas are usually dead ends, or will require a lot of time to be convinced.
    4) Have fun and stay positive!  Prioritize your time and scheduling of follow-up conversations!  The Demo Day pitches and many conversations that will follow are a unique and special time for you as entrepreneurs.  Build relationships, follow-up with the most relevant potential sources of advice or funding. Don’t let the many NOs and frequent radio silences you will encounter discourage you from progressing up the paths you are on.  You are privileged to see opportunities where others are blind, and courageous to climb routes that others are too scared to explore.

    Onwards!
    About Luis Robles

    Startup advisor & Angel Investor, Blockchain enthusiast, Experienced Company Builder & VC Investor (previously @ Sequoia Capital). Co-Founder, VP Products & Marketing at Diamanti. Knowledgeable about enterprise businesses, datacenter infrastructure, cloud computing, distributed + open source software, big data, IOT. Senior Product Manager and early engineer at VMware. BS and MS degrees in Computer Science from Stanford + an MBA from Harvard.
    About the Alchemist Accelerator
    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1277219 2018-04-26T16:07:43Z 2018-05-04T20:17:22Z Customer Advisor Board: Early-Stage Hack to Getting Your First Customers

    As a founder and former CEO, I'm delighted to see so many Alchemist Accelerator portfolio startups executing highly engaged Advisor Councils (AdCos) when acquiring their first 10 paying customers. Yet most startups fall short of scaling their AdCos beyond a few influencers and MVPs. This is a critical mistake.  

    Active AdCos drive you to deliver more customer-focused products while creating momentum in the form of champions, stakeholders, thought leaders, communities, and loyal customers. Think of your AdCo as part of your startup's secret sauce, helping you scale quickly from Council (10-50 people) to Community (50-100 people) to User Conference (100+ people).

    As you embark on your customer development journey, an AdCo can serve as an enticing carrot to attract smart and talented individuals with the pain points you've outlined. Joining an AdCo comes with personal and professional perks—from new skills development to high-quality peer networking. Those joining AdCos recognize these benefits, but they'll become your first customers for two additional reasons: first, they really want the product you're working hard to deliver, and second, they want to help you succeed (and have funding to budget to do it).

    Qualifying early AdCo members is important. You want individuals that are

    • Thought leaders with deep experience and knowledge about the problem you are working to solve

    • Open and willing to co-build a solution with you

    • Able to access budget and have decision-making authority to buy

    Prioritize Your AdCo

    There are benefits across the business to establishing and scaling your AdCo:

    1. Product: Ongoing customer-focused product feedback

    2. Sales: Demand Gen (SQLs) of qualified leads and referrals

    3. Fundraising: Venture capital (VC) due diligence during your current or next round

    Product: Build WITH Customers Not FOR Customers

    AdCos instill a customer-first mindset while providing a critical product feedback loop. Product decisions and team scrum/sprints shift from sharing “I think” to “they said, they want, and they need” inputs.

    Data and insights from your AdCo need to be meticulously recorded and then shared “in their words.” At hiQ, we always found the devil was in the details. You should plan for your AdCo members to spend a full day alongside your engineers, data scientists, and product team members in structured round tables, breakout sessions, and panels.  

    Power tip: Host your AdCo meeting at a Council member’s location. Enterprise companies have conference rooms that can seat more than 20 people, and often, the organization will provide the drinks and snacks.

    Sales: Advisors Become Champions, Then Customers

    Your AdCo is one of the tools in your demand-gen and pre-product sales arsenals, and a measurable outcome of establishing one. AdCo members need to be in your sales pipeline as they move from Advisor to Champion to Customer to Reference and Referral. You'll be able to quickly qualify which Advisors will become champions and customers. They're the ones that will write the internal business use case for budget approval because they can’t live without the product(s) you are building. They'll be the ones standing on stage next to you when you officially launch.

    Power tip: Use a pending AdCo meeting to close a late-stage deal. Prospects enjoy talking with customers before they sign, so have them sit next to each other.

    Fundraising: The Best 2 Hours VCs Spend on Due Diligence

    AdCos will scale with your customer growth, and VCs will notice. VCs think in terms of product market fit. This is validated when they walk into a packed ballroom full of clients, prospects, analysts, and job applicants—all wanting to be part of what you're building. There's no better and bigger moment for you and your employees then having customers on a main-stage talking about your product and how it saves them millions of dollars.

    Power tip: Invite VCs to Council meetings as soon as possible. Their calendars book up a few weeks out.   

    About Darren Grant Kaplan

    Darren Kaplan is the co-founder and founding CEO of hiQ Labs (www.hiqlabs.com), a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator mentor, working with Augmented Reality, Cyber Security, and HR enterprise SaaS startups.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1274419 2018-04-19T15:24:45Z 2018-04-19T16:00:04Z The Key to More Sales: Focus on Your State

    It's not the product. It's not the timing. It's your body language and tonality. Both have more to do with sales success than other factors because at the core, sales is result-driven communication.

    I've been leading sales organizations for more than a decade. However, when I speak with entrepreneurs as an Alchemist Accelerator mentor, I’m reminded that although not everyone is employed in sales, at different times, we all sell—to potential investors, co-founders, employees, partners, and perhaps, even family members.

    Your State Matters

    Take a minute. Consider how you feel right now. You should care about your state of mind because it’s influencing the work that you're doing and the effectiveness of your communication (i.e., your body language and your tonality). You need to ensure your mood is making a positive impact, helping you achieve what technical professionals call flow or being in the zone. This is your peak state, and it affects the results that you want. It heightens your performance. The opposite is also true. If you are in a bad state, your performance dips, you communicate poorly, and you make mistakes.

    A few months ago, I went to a demo-day event where a number of founders were pitching their products to a large audience. After noticing a disturbing trend in a few sessions, I did a little experiment. What I observed was this: at the start of every presentation, attendees sat up, ready to listen. But by the two-minute mark, most attendees lost interest and were looking at their laptops or phone screens. The presenters were dull. Some lacked energy, others lacked enthusiasm, as they pitched their products.

    One presenter was different. He started with high energy. He sounded passionate and engaging. Attendees looked up from their screens and listened. He asked questions, and they paid attention. Yet within a few minutes, his energy dipped and he lost them. The attendees went back to their devices because he couldn't maintain his state.

    I spoke next, determined to engage the audience’s attention through the entire session. My product wasn't any better than the others being presented, so I knew my communication needed to be different. I took a moment to get myself into a peak state. Then I made my pitch with a powerful and palpable energy. I was loud and enthusiastic. I moved around the stage, and asked a ton of questions. Above all, I maintained intensity during my entire talk, and I paid careful attention to the results.

    Throughout my session, the vast majority of the audience was attentive and engaged. I had five times the number of questions about my product than any presentation before me, and at the end, a number of attendees came by to meet me in person. My pitch was successful, and it had very little to do with the product I was introducing.

    The secret to a successful sales pitch is more than the initial spark—it's sustained energy and enthusiasm. If you can achieve peak state, getting into the zone, you communicate better. Your body language and tonality automatically attracts people and significantly enhances your influence over them. If you can consistently attain this state, you can consistently elevate your performance above the norm.

    Two Simple Ways to Master Your State

    There are two simple steps you can take to very quickly make a meaningful difference in the result of any communication:

    1.     Hack your brain

    2.     Hack your body

    What is hacking your brain? In effect, it's an exercise to change your state. You hack your brain before a big pitch by taking five minutes and focusing your thoughts on these things: (Hint: It helps to write them down.)

    • Think of one thing you are truly excited about today. If it's a thing, imagine receiving it right now or if it's an event, imagine it taking place right now. Focus on how you feel.

    • Think of one thing you are truly thankful for in your life? Take a moment to appreciate that feeling.

    • Think of one person you are thankful to have in your life? Take a moment to consider why.

    When you hack your brain, you put it in a different mood. You replace negative emotions with positive ones—excitement, thankfulness, and appreciation—and those excrete the chemicals that get you closer to your powerful peak state.

    Hacking your brain isn’t enough. You need to hack your body in a similar way because emotions and your body are connected in a profound way. If you change the state of your body, you change the state of your mind and vice versa. As Tony Robbins often says, “motion creates emotion!” Doing any form of exercise (e.g., fast-paced walking, running, dancing, or even some jumping jacks) can influence your mental state and put you in the zone. With the right mental state, you'll start to notice that your communication and body language improves. You do better things and you do things better. Sales is one of those things.

    After hacking your brain and your body, you feel better. Your body language automatically improves, and your tonality matches your positive, confident, and empowered emotions. At this moment, you have the best chance to influence others through your communication.

    Achieve Results

    Your body language and tonality are what people use to interpret what you are saying. It’s not what you say, it’s how you say it that matters. Frame of mind and tonality are the reasons two sales people using the exact same script, answering the same questions, can have very different results.

    The next time you're ready to make a cold call, close a deal, pitch to investors, or present in front of an audience, pay attention to your state. If you’re not in a peak state, take a minute to hack your brain, then hack your body. You'll be glad you did.

    About Kevin Ramani

    Kevin is the Head of Sales at Cobalt Robotics, and was one of the founding team members of Close.io, helping to build the company from the ground up. Kevin is also a startup advisor and a mentor to several Silicon Valley startups. Connect with him online.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1269490 2018-04-12T16:00:00Z 2018-04-13T05:50:38Z Funding Basics: Fundraising 101

    If you’re unfamiliar with how venture capital funding works, it can seem akin to playing the lottery. Anyone can try, but only a few lucky entrepreneurs actually win. Fortunately, fundraising isn’t as random as a Powerball drawing and founders can improve their odds of success by engaging with right-size partners, recognizing what investors find intriguing, and understanding the technical aspects of term sheets.

    How do I know?

    I was a VC.

    Establish a Strategy

    As an Associate at Draper Fisher Jurvetson and now as Founder of the Alchemist Accelerator, I’ve met hundreds of people with good ideas and great demos, but far fewer with a strategic plan for fundraising. Founding teams can save time (and alleviate stress) by researching fund sizes and prioritizing meetings based on the outcome they expect. Founders and the venture capitalists they choose will need to make the economics work. Investors will need to pay back their funds. A rule of thumb is that one out of every 10 investments in a VC portfolio will drive outsized returns. And a typical fund has 30 investments. So 3 companies in a given VC fund portfolio will likely be responsible for the fund’s performance. Given this, most investors want to see a path to paying back at least ⅓ of their fund size with an individual investment.

    Investors are also constrained by the number of investments they can make. Because they have to limit the number of board seats they take on, they often can only make 2 or 3 new investments per year. And each investment has to deploy enough capital for them to deploy the cash in the fund. For these reasons, investors at large funds (e.g. funds that are $300m or larger in size) will care much more about whether they have enough ownership in your company to create an exit to pay back their fund than the check size of your investment. In fact, if you are asking for too little money (e.g. less than $3m) it can be more difficult for that investor to justify the investment given the size of their fund and the limited number of new investments they can make each year.

    Ideally, founders approach a mix of VCs during the fundraising process, recognizing that there will be more traction with those that are a good fit. Don’t get too excited about meetings because every firm will want to meet for fear of missing the next big thing—think Google! That’s why it’s important for startup teams to have a plan.

    Choose to make scarcity of supply an asset. Optimize for a short, yet intense fundraising process. Establish a list of three dozen firms, then agree to pursue 12 active discussions at a time—segmenting top-tier / second-tier VC firms, angels / high-value investors, and corporates / strategic investors into separate thirds. This will enable the rapid replacement of non-responsive firms, and help ensure the arrival of term sheets at the same time.  

    Share Your Story

    VCs meet (and subsequently) invest in startups for a variety of reasons. The startup meets all of the criteria of previously proven successful companies in their portfolio; the startup is somehow connected to the VCs personal network that she trusts; or the firm likes to make contrarian bets. Whatever the reason, the dance between startup and VC always begins with a presentation.

    During a seed or series A round, fundraising meetings focus on the idea and its potential. In series C and later rounds, VCs spend time evaluating the idea, the market, and results. How has the company executed to date?

    Early round fundraising presentations are expected to be lean, including a brief overview of the team and the market potential. A dozen or fewer core slides is ideal, coupled with a large appendix of slides that goes deeper into specifics. An overview of capabilities and a product demo will also be expected. Sequoia Capital has a good template for creating solid fundraising presentations.

    But wait... Before presenting, stop, summarize how and why you are there (don’t forget to mention explicit connections). The goal of this is to try to address from the top the two fundamental questions wrestles with: “Are you any good?” and “If you are so good, why are you talking to me?”. At the beginning -- from the top -- you want to signal strength (that you are in fact a company the investor should want to chase), and that you are talking to them because of some privileged access that investor has. For example, “Before I begin, let me just set some context. As you may know, we have been heads down with customers and will be beginning our official raise next quarter. Our attorney XXX spoke very highly of you and recommended we get your guidance in advance of that”.

    You then want to unearth any biases upfront the investor may have before you go into your pitch. VCs often provide the best feedback before you speak. This time is also the best chance you have of understanding any bias or concerns VCs may have about differentiation, distribution, market factors, or some other issue you’re going to cover.

    You can simply ask “Did you have a chance to review the information I sent over?” They may not have, but if they have, you can invite them to share what’s important to them upfront so you can cater your talk better to them.

    At the end of the day, VCs want founders to like them and VCs want to like the founding team’s energy and passion. After all, funding is a long-term commitment (typically 3—7 years). Additionally, potential investors want to be sure the market opportunity is large enough and that a startup’s entry point is specific enough to ensure a big return.

    About Ravi Belani

    Ravi Belani is Fenwick & West Lecturer of Entrepreneurship at Stanford University, and Managing Director of the Alchemist Accelerator. Ravi formerly spent six years as part of the investment team at Draper Fisher Jurvetson's Menlo Park global headquarters, where he led investments and served on the boards as the first institutional investor in companies such as Justin.TV & Twitch (acquired by Amazon for $970m), Pubmatic, Vizu (acq’d by Nielsen), and Yield Software (acq'd by Autonomy). Ravi formerly worked in product management at two Kleiner Perkins enterprise startups, and as a consultant in McKinsey and Company's San Francisco office. Ravi is a Phi Beta Kappa and Tau Beta Pi graduate of Stanford University, holding a BS with Distinction and MS in Industrial Engineering. Ravi also holds an MBA from Harvard Business School.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley -- including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    This blog is the third in a financing series with topics designed to help entrepreneurs be better prepared for venture capital conversations.

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    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1266000 2018-04-05T14:20:25Z 2018-04-05T16:00:07Z How One Hour of Customer Development Saves Five Hours of Coding

    The greatest expert on your customer is: your customer.  I consider that rule number one on any customer development journey.

    Over the years, I’ve discovered one of the biggest mistakes tech entrepreneurs make is overbuilding. Teams get so excited about an idea that they create feature after feature, hoping one of them will help someone, somewhere, soon save time, spend less, or be entertained.  

     

    Getting to Data-Driven

    The reason I wrote Lean Customer Development to stop teams from building things that people don’t want. That’s what successful customer development does for you - allows you to avoid (some) mistakes and focus on building what your customers will use, love, and buy.  You see, no matter how smart people are, no matter how well they know their industry, they’re wrong at least half of the time. That means about 50 percent of what is built is wasted effort!

    In my experience, every hour spent on customer development saves an organization five hours of design and coding time. That’s my conservative estimate. It’s probably closer to 20 hours.

    One of the reasons teams overbuild is because humans like to do what comes naturally. We like to build! We love coming up with solutions (that’s why we join product teams and start companies). But if you’re just starting out, you have to embrace what comes a little less naturally—and that’s listening.

    Following a Proven Process

    Start with a hypothesis. Ask the right questions. Make sense of the answers. Then figure out what to build based on the input. Those are steps to successful customer development, yet not everyone follows them.

    Teams often lead with their own product - a solution created based on assumptions of who’ll need it and why. We don’t create a narrow, unbiased hypothesis that focuses on the person, the problem, and how we can make their life better. This is ineffective for a couple of reasons.

    First, it puts you in the role of the expert when you really need to be learning from your prospective customer. Second, once you show someone a solution, that’s what they’ll talk about. Rarely does the person you’re talking with stop and say, “wait, I don’t really have that problem” or “hold on, I’m not motivated to change my behavior over this”.  When you start with a solution, you risk hearing a lot of “polite maybes” instead of uncovering the “here’s what I really need” answers that lead you to a successful business.

    Getting Input

    As an Alchemist Mentor, I encourage founders to start with one testable hypothesis.  For example, “I believe [type of person] has [problem they need to solve] in order to [experience this benefit]”. There are three segments to that hypothesis, and each of them can be invalidated - you might be talking to the wrong type of person; they may not have the problem you expect; they may not see that a solution will make their life better.

    There may be multiple stakeholders - for example, if you are trying to develop a solution to improve patient compliance in taking their medicine, you’ll likely need to talk to the doctors who prescribe medication as well as the people swallowing the pills. By understanding the behaviors, motivations, and constraints of all your stakeholders, you’ll be better able to design a solution that they’ll actually use and benefit from.

    Abstract up a level: more general, “storytelling” questions about the ways people do their jobs, what they buy, and how they use products give you more informative answers than yes/no questions. For example: What frustrates you about your job? How is work done in your organization? How do you evaluate solutions? Open-ended questions like these give customers the power to talk about what matters most to them. At the end of the discussion, don’t forget to inquire about what else you should have asked.

    I prefer one-on-one conversations: in-person is great, because you can see the customer’s environment - but phone conversations are often far easier to schedule and conduct. The best customer development method is the only you’ll actually do!

    I’m not a fan of focus groups. It seems far more efficient to talk to multiple people at once, but participants may not openly share in a group for fear of sounding dumb or having an idea dismissed.

    Depending on your hypothesis, you may easily find people in your extended network or a community online. (When people ask, ‘but how will I find people before I have a product to show them?’, I ask ‘but how were you planning on finding people after you have a product?’)  Sometimes you’ll need to pay for access to the right people through services such as LinkedIn InMail or user research firms, but generally you’re better off investing the time to figure out where your prospective customers ‘live’, online or offline, and making yourself part of those spaces.  You’ll need to build that trust eventually, so you may as well start in the early phases of your company!

    Making Decisions

    No matter how you discover customers, approach each conversation as a listener, not an expert.  I often recommend telling people explicitly, “I want to hear from you - I’m going to try and talk as little as possible.”  That’s the valuable data you need to inform your decisions. Whether you’re building your first product or rolling out a new feature, test everything. Customer discovery that’s about them, not you, is how to ensure your startup builds something people actually want to use and will pay money to buy.

    About Cindy Alvarez

    Cindy Alvarez is the author of Lean Customer Development: Building Products Your Customers Will Buy and Director of User Experience for Yammer (a Microsoft company). She has over a dozen years’ experience leading design, product management, user research, and customer development for startups, and is currently using that background to drive intrapreneurial change within Microsoft. She tweets as @cindyalvarez.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley -- including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1265986 2018-03-29T14:54:34Z 2018-03-29T16:00:04Z Do Pivots Matter?                                                               There’s a sign on the wall but she wants to be sure
                                                               Cause you know sometimes words have two meanings
                                                                               Led Zeppelin – Stairway to Heaven

    In late 2013 Cowboy Ventures did an analysis of U.S.-based tech companies started in the last 10 years, now valued at $1 billion. They found 39 of these companies.  They called them the “Unicorn Club.”

    The article summarized 10 key learnings from the Unicorn club. Surprisingly one of the “learnings” said that, “…the “big pivot” after starting with a different initial product is an outlier. Nearly 90 percent of companies are working on their original product vision. The four “pivots” after a different initial product were all in consumer companies (Groupon, Instagram, Pinterest and Fab).”

    One of my students sent me the article and asked, “What does this mean?”  Good question.

    Since the Pivot is one of the core concepts of the Lean Startup I was puzzled. Could I be wrong? Is it possible Pivots really don’t matter if you want to be a Unicorn?

    Short answer – almost all the Unicorns pivoted. The authors of the article didn’t understand what a Pivot was.

    What’s a pivot?
    A pivot is a fundamental insight of the Lean Startup. It says on day one, all you have in your new venture is a series of untested hypothesis. Therefore you need to get outside of your building and rapidly test all your assumptions. The odds are that one or more of your hypotheses will be wrong. When you discover your error, rather than firing executives and/or creating a crisis, you simply change the hypotheses.

    What was lacking in the article was a clear definition of a Pivot.  A Pivot is not just changing the product. A pivot can change any of nine different things in your business model. A pivot may mean you changed your customer segment, your channel, revenue model/pricing, resources, activities, costs, partners, customer acquisition – lots of other things than just the product.

    Definition: “A pivot is a substantive change to one or more of the 9 business model canvas components.”

    Business Model
    Ok, but what is a business model?

    Think of a business model as a drawing that shows all the flows between the different parts of your company’s strategy. Unlike an organization chart, which is a diagram of how  job positions and  functions of a company are related, a business model diagrams how a company makes money – without having to go into the complex details of all its strategy, processes, units, rules, hierarchies, workflows, and systems.

    Alexander Osterwalder’s  Business Model canvas puts all the complicated strategies of your business in one simple diagram. Each of the 9 boxes in the canvas specifies details of your company’s strategy.  (The Business Model Canvas is one of the three components of the Lean Startup. See the HBR article here.)

    So to answer my students question, I pointed out that the author of the article had too narrow a definition of what a pivot meant. If you went back and analyzed how many Unicorns pivoted on any of the 9 business model components you’d likely find that the majority did so.

    Take a look at the Unicorn club and think about the changes in customer segments, revenue, pricing, channels, all those companies have made since they began: Facebook, LinkedIn – new customer segments, Meraki – new revenue models, new customer segments, Yelp – product pivot, etc. – then you’ll understand the power of the Pivot.

    Lessons Learned

    • A Pivot is not just when you change the product
    • A pivot is a substantive change to one or more of the 9 business model canvascomponents
    • Almost all startups pivot on some part of their business model after founding
    • Startups focused on just product Pivots will limited their strategic choices – it’s like bringing a knife to a gunfight

    About Steve Blank

    Entrepreneur-turned-educator Steve Blank is credited with launching the Lean Startup movement. He’s changed how startups are built; how entrepreneurship is taught; how science is commercialized, and how companies and the government innovate. Steve is the author of The Four Steps to the Epiphany, The Startup Owner’s Manual -- and his May 2013 Harvard Business Review cover story defined the Lean Startup movement.  He teaches at Stanford, Columbia, Berkeley and NYU; and created the National Science Foundation Innovation Corps -- now the standard for science commercialization in the U.S. His Hacking for Defense class at Stanford is revolutionizing how the U.S. defense and intelligence community can deploy innovation with speed and urgency, and its sister class, Hacking for Diplomacy, is doing the same for foreign affairs challenges managed by the U.S. State Department. Steve blogs at www.steveblank.com.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1258354 2018-03-08T17:00:00Z 2018-03-24T01:23:14Z Strategy is Not a To Do List

    I had breakfast with two of my ex-students from Singapore who were building a really interesting startup. They were deep into Customer Discovery and presented a ton of customer data on the validity of their initial hypothesis – target customers, pricing, stickiness, etc. I was unprepared for what they said next. “We’re going to do a big launch of our product in three weeks.” I almost dropped my coffee. “Wait a minute, what about the rest of Customer Development? Aren’t you going to validate your hypotheses by first getting some customers?”

    Without any sense of irony they said, “Oh, our investors convinced us to skip that part, because our customer feedback was all over the map and our schedule showed us launching in three weeks and they were worried that we’d run out of cash. They told us to stay on schedule.” Now I was confused, and I asked, “Well what do you guys believe – Customer Development or launch on a schedule?” Without missing a beat they said, “Oh, we believe both are right.”

    I realized I was listening to them treat Customer Development as an item on their To Do list.

    Suddenly, I had a massive case of déjà vu.

    Can You Pull This Off
    I was VP of marketing at Ardent, a supercomputer company where a year earlier I had a painful and permanent lesson about Customer Discovery. I was smart, aggressive, young and a very tactical marketer who really hadn’t a clue about what strategy actually meant.

    One day the CEO called me into his office and asked, “Steve I’ve been thinking about this as our strategy going forward. What do you think?” And he proceeded to lay out a fairly complex and innovative sales and marketing strategy for our next 18 months. “Yeah, that sounds great,” I said. He nodded and then offered up, “Well what do you think of this other strategy?” I listened intently as he spun an equally complex alternative strategy. “Can you pull both of these off?” he asked looking right at me. By the angelic look on his face I should have known that I was being set up. I replied naively, “Sure, I’ll get right on it.”

    Ambushed
    25 years later I still remember what happened next. All of sudden the air temperature in the room dropped by about 40 degrees. Out of nowhere the CEO started screaming at me, “You stupid x?!x. These strategies are mutually exclusive. Executing both of them would put us out of business. You don’t have a clue about what the purpose of marketing is because all you are doing is executing a series of tasks like they’re like a big To Do list. Without understanding why you’re doing them, you’re dangerous as the VP of Marketing, in fact you’re just a glorified head of marketing communications.”

    I left in daze angry and confused. There was no doubt my boss was a jerk, but unlike the other time I got my butt kicked, I didn’t immediately understand the point. I was a great marketer. I was getting feedback from customers, and I’d pass on every list of what customers wanted to engineering and tell them that’s the features our customers needed. I could implement any marketing plan sales handed to me regardless of how complex. In fact I was implementing three different ones. Oh…hmm… perhaps I was missing something.

    I was doing a lot of marketing “things” but why was I doing them? I had approached my activities as simply as a task-list to get through. With my tail between my legs I was left to ponder; what was the function of marketing in a startup?

    Strategy is Not a To Do List, It Drives a To Do List
    It took me awhile, but I began to realize that the strategic part of my job was two-fold. First, (in today’s jargon) we were still searching for a scalable and repeatable business model. My job was to test our hypotheses about who were potential customers, what problems they had and what their needs were. Second, when we found these customers, marketing’s job was to put together the tactical marketing programs (ads, pr, tradeshows, white papers, data sheets) to drive end user demand into our direct sales channel and to educate our channel about how to sell our product.

    Once I understood the strategy, the To Do list became clear. It allowed me to prioritize what I did, when I did it and instantly understand what would be mutually exclusive.

    Good Luck and Thanks For the Fish
    My students were going through the motions of Customer Development rather than understanding the purpose behind it. It was trendy, they had read my book and to them it was just another step on the list of things they had to do. They had no deep understanding of why they were doing it. So they were at a crossroads. Since their investors had asked them to launch now, what happened if their initial assumptions were wrong?

    As they left I hoped they would be really lucky.

    Lessons Learned

    • Entrepreneurs get lots of great advice.
    • Most of it is mutually exclusive.
    • Don’t do it if you can’t explain why you’re doing it.
    • Or else it all becomes a To Do list.

    About Steve Blank

    Entrepreneur-turned-educator Steve Blank is credited with launching the Lean Startup movement. He’s changed how startups are built; how entrepreneurship is taught; how science is commercialized, and how companies and the government innovate. Steve is the author of The Four Steps to the Epiphany, The Startup Owner’s Manual -- and his May 2013 Harvard Business Review cover story defined the Lean Startup movement.  He teaches at Stanford, Columbia, Berkeley and NYU; and created the National Science Foundation Innovation Corps -- now the standard for science commercialization in the U.S. His Hacking for Defense class at Stanford is revolutionizing how the U.S. defense and intelligence community can deploy innovation with speed and urgency, and its sister class, Hacking for Diplomacy, is doing the same for foreign affairs challenges managed by the U.S. State Department. Steve blogs at www.steveblank.com.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1254535 2018-03-01T15:00:02Z 2018-03-01T17:00:04Z Funding Basics: Customer Development

    Entrepreneurs take note. More startups fail from a lack of customers than from a failure of product development. That’s why I believe strongly that every new product company should have a methodology for developing customers.

    I’m a proponent of Steve Blank’s startup stack methodology for customer development, which features the following steps:

    • Customer Discovery – Begin with a business model canvas, a summary of how you’re going to serve customers and earn money

    • Customer Validation – Make assumptions, then test them to develop a repeatable and scalable sales process

    • Execution –  Fine tune your model to get to a market fit that is tight and profitable; pivot, as needed

    As an Alchemist Accelerator mentor, I recently had an opportunity to share some perspective about the customer development process and how to maximize success. The first thing I told the group in front of me—a large percentage of whom were engineers—was that they should focus everything on finding the right customer segment, rather than building or modifying a new product concept to fit initial discussions. I think I heard a collective sigh of relief before I began my presentation.

    Completing Your Canvas

    Research has proven effective customer discovery begins with a business model canvas, so the first part of our discussion, framed in that context was designed for them to hear one thing: You are making a best-guess at first. There will be plenty of time for refinement, when you know more.

    A strategic management and lean startup template, your canvas should reflect initial assumptions. To begin, you must understand the market you’re targeting—total addressable, served available, and/or target market. You’ll also need to define the type of market you’re hoping to penetrate. Is it existing with incumbents, but a known problem; new with no competition, but steep education requirements; re-segmented where you’re offering a lower cost or niche alternative; or are you cloning a concept from somewhere else?

    Your canvas should also identify key value propositions. What is the job your customers are hiring you to do? How will you do it, and most important, what one-to-three benefits will customers get from using your product or service?

    In the customer relationships section of your canvas, you’ll need to outline how you plan to

    • Get customers

    • Keep customers

    • Grow customers

    In addition, your canvas should highlight any other key activities, resources (e.g. required equipment), partners and costs (fixed and variable), as well as your anticipated revenue model (e.g., one-time scale, subscription, etc.).

    Finding Your Fit

    A completed business model canvas ensures your team has fully immersed itself in the customer problem. As such, it can serve as a foundation as you define tests for customer validation.

    Testing can begin once you’ve identified subjects. Who are they—end users, influencers, recommenders, decision makers, or others? What do they do all day, and can you create an organizational or influencer map around them? Plus, don’t forget to acknowledge any saboteurs because they have no interest in your success.   

    Next, only founders should conduct customer validation meetings, and they should be face-to-face for added visual cues. Don’t outsource the job. Ask open-ended questions and avoid trying to convince someone he or she needs your solution. Test your theories to determine if you’re on the right track. If you don’t get a good signal, reframe the problem. Test again.

    In general, ask questions that help you learn more. Lead with

    • Tell me more about…

    • What do you mean by…

    • How so…

    • Why is that…

    • What are your thoughts on…

    • How would you quantify…

    • How did you measure…

    • How did you come up with that…

    • What was your thinking behind…

    The goal of every customer validation meeting should be the same: To understand the problem space and the current solutions available.

    Pivoting and Execution

    During customer validation, your team may uncover some startling truths. Your product doesn’t fit the market it was intended to serve. Prospects already have a solution for x, but have you considered this other opportunity, y? Do not panic.

    Instead, apply your development methodology to your customer discovery process. Be agile. Don’t build a new product. Find a new set of customers. Pivot into a new space and test again.

    By following a customer development process, you have a tremendous opportunity to deliver what people will pay for, improving your product along the way. Moreover, you’ll have high-quality data to answer the question “who is your customer?” when potential investors ask.

    About Alan Chiu

    Alan Chiu is a Partner at XSeed Capital, with a strong background in enterprise software startups. His investment areas include mobile enterprise applications, data analytics platforms, enterprise infrastructure, and fintech startups. He serves on the Board of Directors of Breakaway and previously served on the board of StackStorm (acquired by Brocade – NASDAQ:BRCD). He has provided support to other portfolio companies including Lex Machina (acquired by LexisNexis of the RELX Group – NYSE:RELX), AtScale, Dispatcher, Teapot (acquired by Stripe), Pixlee, SIPX (acquired by ProQuest), Zooz, BrainofT, Mines.io, Inklo, and My90. Alan is currently Co-President for Stanford Angels & Entrepreneurs, an alumni association that seeks to strengthen Stanford’s startup community by fostering relationships among entrepreneurs and alumni investors.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley -- including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    This blog is the second in a financing series with topics designed to help entrepreneurs be better prepared for venture capital conversations.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1251039 2018-02-22T16:00:03Z 2018-02-22T17:00:03Z Funding Basics: Adopting the Best Business Model

    The culture of nearly every business-to-business software startup centers on products. Everyone talks about product innovation and disruptive technology, but I think today’s founders need more than great product ideas to launch successful companies.

    In my role as Managing Director of Hummer Winblad and also as an Alchemist Accelerator mentor, I share this advice with new entrepreneurs: Get as comfortable with your spreadsheets as you are with your product. By that I mean that your financial models show potential investors you’ll be a metrics-driven organization and that you understand you are building a business not just a product. I also believe that only metrics-driven companies can operate high-velocity business models.

    A New, Emerging Approach

    If success is 10 percent idea and 90 percent execution, deep thinking is required of teams pulling together new business models. For example, are you going to sell direct or through a channel?  Will you have a subscription or a perpetual model? Do you envision a “land and expand” model where you encourage a smaller, initial buy that increases over time? Does your business model reflect the way customers want to buy?

    Teams developing enterprise software traditionally have had to factor in a 9-to-12-month sales cycle on top of the year or more it takes to deliver product. Both development and expensive sales professionals operating in this model require significant runway—and thus funding.

    Fortunately, times are changing.

    Taking a cue from evolving consumer models, I now encourage enterprise software founders to more precisely consider cost of sales (including customer acquisition costs relative to pricing and hiring) together with product decisions.

    Our team members and other venture firms ask them to think about how they can achieve operational and growth targets from two perspectives:

    • The old model – Costly, large account-focused, in-person sales teams operating on a quarterly rhythm

    • The new model – High-velocity, mid-market-focused, inside sales teams operating on a weekly rhythm

    The new, high-velocity model optimizes sales and marketing processes by measuring the end-to-end effectiveness of all touchpoints. With metrics, teams can determine what is and what isn’t delivering results. I created two blog posts a few years ago explaining the high-velocity business model and the metrics for a high-velocity business model—based on the success of teams that Hummer Winblad invested in early.

    High-Velocity Benefits

    For a startup pricing products in the USD$150,000 and up range, leveraging the traditional, enterprise sales model may still be practical and even preferred. For everyone else, here’s why a high-velocity model makes more sense:

    • Faster time to revenue – The combination of an assertive inside sales professional (who can reach 80 to 100 prospects a day) and a web purchasing model speeds sales, which enables the company to run on monthly recurring revenue.

    • Greater accountability – When your product team’s responsibilities expand beyond building the solution to the entire lifecycle (from first customer touch to download to using), teams are more collaborative and can achieve greater success faster.

    • Complete visibility – Companies operating high-velocity models are highly automated and instrumented, so individuals and teams are always aware of their goals and progress toward reaching them—from calls and demos to trials, seats, and monthly volumes.

    Does Your Business Have the DNA?

    In a high-velocity business model, leadership, product, sales and marketing teams all shoulder responsibility for success. We see entrepreneurs embracing this new approach taking a similar journey, learning from others that have succeeded already about how to ramp up fast.

    My tips for them include the following:

    1. Hire consumer experts to run your enterprise marketing model, so it’s firing on all cylinders

    2. Simplify the sales process by adding a free or low-cost download feature

    3. Add insides sales professionals to follow up on every lead and upsell from the download

    4. Run everyone in the company through your sales process—from start to finish—to ensure everyone understands it

    5. Test online pricing and trial models by dividing traffic

    6. Test your social media and web flows, counting the number of clicks at each step

    7. If you choose to work with channels, hire someone that has previously built them

    8. Bet on mid-market customers to start, but establish a sales value that when exceeded, makes sense to add enterprise sales

    For founding teams seeking funding, business models matter. Remember your ability to explain the thinking behind your business model is as important as explaining the product you’re going to bring to market—and sometimes, more important.

    About Me

    As Managing Director at Hummer Winblad, I oversee investments in SaaS, virtualization, cloud and mobile technologies. Prior to joining Hummer Winblad Venture Partners in 2006, I was involved in founding and operational roles at start-up companies. I was a co-founder of AutoFarm (now Novariant), a company focused on GPS and robotics. Although I spend less time programming now, I started my technical career coding and hacking computer games. I have a Master of Science (Engineering) degree from Stanford University, an M.B.A. from the Stanford Graduate School of Business, and an Engineering Physics degree from Queen’s University.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley -- including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    This blog is the first in a financing series with topics designed to help entrepreneurs be better prepared for venture capital conversations.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1230702 2018-02-01T16:11:14Z 2018-02-01T17:00:05Z Not BI, AI

    A product business can double its revenue and quadruple its margins by moving to a service business. What is service? It's information, personal and relevant to you.  

    Amazon delivers information that is personal and relevant to you, for example, with its recommendations: customers like you bought this book, or customers like you like this music. Now think about your favorite banking site and log in. I will contend that there’s very little personal and relevant information. The only reason you’re being asked to log in is for security reasons. After that you are really looking at a big shopping cart to move money from savings to checking, buy stocks, sell a bond, etc. 

    Could the bank deliver information that’s personal or relevant to you? Could they say that people like you bought this stock, or people like you re-financed their mortgage? Yes, they could, so why don’t they? Well, you probably never thought about this, but the consumer Internet that Google and Bing let you see through search is believed to only be about 100 or 200 terabytes. That’s it. Now, I’ll guarantee your current IT systems have 10, 100, or 1,000 times that amount of information; so why can’t they deliver information that is personal and relevant to you? Well, I say they are held hostage by the SQL monster. So let’s just have a little fun here.

    It’s the late ‘90s and I have several SQL engineers in the room. I come in with a brilliant business idea. My idea is that we are going to index the consumer Internet and we’re going to monetize it with ads. We’re going to be billionaires! Just guess what the SQL engineers would do?

    The first thing they’re going to do is design a master, global-data schema to index all information on the planet. The second thing they’re going to do is write ETL and data cleansing tools to import all that information into this master, global-data schema. And the last thing they are going to do is write reports, for instance, the best place to camp in France or great places to eat in San Francisco.

    Any of you who are technical are probably laughing right now thinking, “Well that’s a completely stupid thing to do.” But if you try and attack the problem using SQL and BI tools, you’re also going to fail.  

    Furthermore, as you connect your machines, you have the opportunity to bring in large amounts of time-series data. Modern wind turbines have 500 sensors and the ability to transmit those sensor readings once a second. Most analytic techniques depend on the idea that the data scientist can try and visualize the data, but how is that possible if I have a 1,000 wind turbines and data for 12, 24 or 36 months?  How can we learn from that?

    Artificial Intelligence (AI) has been increasingly in the news. Google’s DeepMind made headlines when the machine, AlphaGo, programmed to play Go, defeated Lee Sedol, one of the best players in the world, by 4 - 1. Amazon’s Echo and voice assistant Alexa is being widely praised for its voice recognition capabilities, and many people remember how Watson handily beat the best Jeopardy players in the world.

    Things have been changing quickly and here is a great example. ImageNet is a database of millions of images. Beginning in 2010 the ImageNet Challenge was established to see how well a machine would do at object recognition. As a point of reference an average person will be able to achieve 95% accuracy. In 2010, the winning machine could correctly label an image 72% of the time. By 2012, accuracy had improved to 85%, and in 2015 the machine achieved 96% accuracy.

    So why have things been changing so quickly?

    First, we’re continuing to get more computing and more storage for lower and lower prices. Next generation compute and storage cloud services can provide thousands of computers for an hour or a day. AI and machine learning software require lots of computing during the learning phase. The second reason is the emergence of neural network algorithms. Third, it’s not possible to apply these advanced AI technologies without data, and lots of it. Consumer Internet companies like Facebook are able to use billions of photos to train facial recognition systems. AlphaGo learned from millions of games of Go and Alexa learned from millions of voice patterns.

    While we’ll continue to see progress in replicating what humans do, we have the opportunity to apply these AI technologies to even more important challenges. Today, many of the machines that generate electricity, transport goods, farm food, or sequence genes have large amounts of data. If we were able to connect these machines and collect the sensor data from them, we would have the opportunity to use AI and machine learning technologies to operate a more precise planet. Imagine a future farm that can use fewer pesticides, which not only reduces the cost of the food, but also makes it healthier. A future power utility could be based on a vast array of solar panels, wind turbines, small hydro generators and batteries to generate more power, much more efficiently. A pediatric hospital could share the results of millions of MRI scans and diagnose patients far faster.

    Next-generation machine companies could not only double their revenues and quadruple their margins, but build a better planet in the process.

    ---

    Timothy Chou, Ph.D.

    Timothy Chou has lectured at Stanford University for over twenty-five years and is the Alchemist Accelerator IoT Chair.  Not only does he have academic credentials, but also he's served as President of Oracle's cloud business and today is a board member at both Blackbaud and Teradata. He began his career at one of the first Kleiner Perkins startups, Tandem Computers, and today is working with several Silicon Valley startups including as the Executive Chairman of Lecida, which is building precision assistants for the IoT using AI technologies. Timothy has published a few landmark books including, The End of Software, and Precision: Principals, Practices and Solutions for the Internet of Things, which was recently named one of the top ten books for CIOs.  He's lectured at over twenty universities and delivered keynotes on all six continents.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1234283 2018-01-25T16:03:55Z 2018-02-01T08:23:50Z Service is Not Break-Fix

    As a student of business, you may have come to realize that with a recurring-service-revenue business, you can not only double the revenues of the company, but also quadruple the margins. I recently spoke with an executive of a large European company who has a 50/50 business; 50% of their revenue is selling machines and 50% is service on those machines. He said, “In 2008 our revenues went down, but our margins went up.”

    But what is service? Is it answering the phone nicely from Bangalore? Is it flipping burgers at McDonald’s? No. Service is the delivery of information that is personal and relevant to you. That could be the hotel concierge giving you directions to the best Szechuan Chinese restaurant in town, or your doctor telling you that, based on your genome and lifestyle, you should be on a specific medication. Service is personal and relevant information.

    I’ve heard many executives of companies that make machines say, “Our customers won’t pay for service.” Well of course, if you think that service is just fixing broken things, then your customers will think you should be building a more reliable product.

    Service is information. In 2004, the Oracle Support organization studied 100 million support requests and found that over 99.9% of them had been answered with already known information.

    Aggregating information for thousands of different uses of the software, even in a disconnected state, represents huge value over the knowledge of a single person in a single location. Real service is not break-fix, but rather information about how to maintain or optimize the availability, performance or security of the product.

    Above is my Amazon home page. Every time you log in, Amazon attempts to deliver information that is personal and relevant to you. For instance, people like you bought this book. If you look closely at the image, you might guess who uses my Amazon account. Now, let’s point something else out, namely the little shopping cart in the upper right hand corner. That’s the transactions processing system. It has to operate securely with scalability, but how important is it?  Not very.  Instead, most of the real estate of the page, and therefore of the company, is dedicated to delivering information that is personal and relevant.  

    Service is information.

    ---

    Timothy Chou, Ph.D.

    Timothy Chou has lectured at Stanford University for over twenty-five years and is the Alchemist Accelerator IoT Chair.  Not only does he have academic credentials, but also he's served as President of Oracle's cloud business and today is a board member at both Blackbaud and Teradata. He began his career at one of the first Kleiner Perkins startups, Tandem Computers, and today is working with several Silicon Valley startups in roles from investor to executive chairman. Timothy has published a few landmark books including, The End of Software, and Precision: Principals, Practices and Solutions for the Internet of Things, which was recently named one of the top ten books for CIOs.  He's lectured at over twenty universities and delivered keynotes on all six continents.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1230695 2018-01-18T17:00:00Z 2018-02-01T08:23:50Z Not Machines, It’s the Service

    If your company builds agricultural, power, construction, healthcare, oil, gas or mining machines you’ve probably heard about the Internet of Things.  All of us in the tech community are excited to tell you about our cool technology to run on your machine, connect it to the Internet, collect data from it, and then make predictions from that data using advanced machine learning technology.

    But maybe the question you’re asking as the CEO of one of these companies is why should I care?  Isn’t this just stuff my geeky R&D staff cares about? How can it be meaningful to my business?  

    I’ll be making the case that with IoT software; you can not only double the size of your business but also create a barrier that your competition will find difficult to cross.

    Next generation machines are increasingly powered by software.  Porsche’s latest Panamera has 100 million lines of code (a measure of the amount of software) up from only 2 million lines in the previous generation.  Tesla owners have come to expect new features delivered through software updates to their vehicles.  Healthcare machines are also becoming more software defined. A drug-infusion pump may have more than 200,000 lines of code and an MRI scanner more than 7,000,000 lines. On a construction site a modern boom lift has 40 sensors and 3,000,000 lines of code and on the farm a combine-harvester has over 5,000,000 lines of code.  Of course we can debate if this is a good measure of software, but I think you get the point.  Software is beginning to define machines.

    So if machines are becoming more software defined, then maybe the business models that applied to the world of software will also apply to the world of machines. Early in the software product industry we created products and sold them on a CD; if you wanted the next product, you’d have to buy the next CD. As software products became more complex, companies like Oracle moved to a business model where you bought the product (e.g. ERP or database) together with a service contract. That service contract was priced at a derivative of the product purchase price. Over time, this became the largest and most profitable component of many enterprise software product companies.  In the year before Oracle bought Sun (whilst they were still a pure software business) they had revenues of approximately $15B, only $3B of which was product revenue, the other $12B, over 80%, was high margin, recurring service revenue.

    In the world of machines, you might wonder why General Electric is running ads on Saturday Night Live talking about the Industrial Internet.  Why are they doing this?  All you need to do is download the 2016 10-K (http://www.ge.com/ar2016/assets/pdf/GE_2016_Form_10K.pdf) and look on page 36.  Out of $113B in revenue they recognized $52B, or nearly 50%, as service revenue.  Imagine if GE could move to 80% service revenue, not only would the company be tens of billions of dollars larger, but also margins for the overall business could easily double. And let me remind you this is all done without connecting the product (software or machine).  Once connecte you can provide even more service and ultimately deliver your product as a service.  As we have already seen in high tech software and hardware moving to product-as-a-service is transformative.

    So if you’re an executive at a power, transportation, construction, agriculture, oil & gas, life science, or healthcare machine company, how big is your service business?

    ---

    Timothy Chou, Ph.D.

    Timothy Chou has lectured at Stanford University for over twenty-five years and is the Alchemist Accelerator IoT Chair.  Not only does he have academic credentials, but also he's served as President of Oracle's cloud business and today is a board member at both Blackbaud and Teradata. He began his career at one of the first Kleiner Perkins startups, Tandem Computers, and today is working with several Silicon Valley startups in roles from investor to executive chairman. Timothy has published a few landmark books including, The End of Software, and Precision: Principals, Practices and Solutions for the Internet of Things, which was recently named one of the top ten books for CIOs.  He's lectured at over twenty universities and delivered keynotes on all six continents.


    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1181877 2017-08-08T20:15:02Z 2018-02-01T08:23:50Z CANDID CONVOS: Angel Fundraising with Ahryun Moon, CEO at Goodtime.io

    Introduction


     Ahryun Moon is CEO and Co-founder at GoodTime.io, a recruiting enablement platform that automates interview scheduling for companies like Airbnb, Stripe, Yelp, Thumbtack and more. She is a financial professional turned engineer! She taught herself how to code while building her first enterprise software at Freescale Semiconductor, Inc., at which time she was a financial analyst. The software got adopted company wide.

    Some interesting things about her:

    1. She caught a thief using Twitter (check out http://bit.ly/2gmr5P4) - gone viral on Hacker News, Reddit, Facebook, Twitter and Youtube

    2. Her team at GoodTime.io won 3 hackathons - Salesforce $1M, Toyota and Launch hackathons

    3. Her team built Etch Keyboard which was featured on the App Store for 3 weeks.

    4. She still has a CPA license in good standing


    The Convo


    Interviewer (ZP): What was the size of your first check?

    Ahryun Moon (AM): $100 was the first check. What happened was right before Alchemist, I was down and depressed and going to a bunch of people asking for advice and feedback and money. I then went to Edith and she, after hearing me out, said, “Hey I'll be your first investor, here's your hundred dollar check. You can put me on Angel list.” With investors the very first check is important so you can put someone's name on your angellist. That’s hard to get. The very first person that wants to be on your investor roster is always challenging. She said to just use her name she’d give us the one hundred dollars. I have kept our hundred dollars even today. So that $100 is still on my cap table, as I really love the fact that she believed in me when no one did. So my first check was $100, and then the second check was 10k.

    ZP: What about the first check over 25k or more?

    AM: Oh 25k or more. The first time that a check was larger than 25K was 50k.

    ZP: And when was the closing date you received it.

    AM: We closed the check on the day of the demo day.

    ZP: And it was just that simple?.

    AM: He came up to me and said he was just ready to write the check.

    ZP: What industry is your company in.

    AM: HR and Recruiting.

    ZP: Tell me about the process of closing that check and from start to finish. How you were introduced all the way through to actually having a check in hand or money in the bank.

    AM: For the 50k check, he was in the audience at the demo day. He loved it. He came up to us and he was literally ready to write the check. I think we got the check within a few days or a week or so. He didn't have any other references. He just saw us at demo day and liked us. Sometimes you can really run into someone that just believes in you and gives you unconditional love for the product that you're making. So I am lucky with that. But I think you just get lucky sometimes.

    ZP: So what was it like doing that to the first 10k check.

    AM: The 10k check was when we were going negative, negative, negative, and we were about to break our 401k. It was one of the Alchemist Mentors and he liked our product from the beginning. We were so afraid of asking for money at the time.

    ZP: How did you meet him?

    AM: He was one of the mentors that we paired up with at one of the events, the CEO mentor event. We did speed dating, he was one of the three people there we met. He liked the idea and we never asked for money. We didn't know to ask for money at the time. We invited him over to our office and we talked for another hour or so after the event. That was after a month or two after we met for the first time. And then we mentioned, “Hey we are looking for investors”. And he simply said “How much”. We told him we were looking for 10k. And he's said, “OK. I don't have a check with me. I'll wire you the money as soon as I get back to my office.” He wired it within a few days.

    ZP: Wow. Was there any back and forth between you or was it pretty straightforward?

    AM: It was really straightforward. People who argue with you and nitpick on this or that and say “I want to see more proof”, they never work out. Investors that ended up giving us money, you can tell from the first meeting that they believe in you and will give you support. So I'll say my advice is this: it's the ones that give you bullshit excuses and say you’re too early, you're too late in the stage, you're pre-revenue you or your team is too small, move on to the next person. They will not give you money. They never gave me any money. People who said those things never gave me money.

    ZP: Those things were just an afterthought when they just believe you.

    AM: Yes. I think I took them extremely personally in the beginning and that made me really, really depressed. Whenever I get that kind of excuse next time I wouldn't too depressed. I will just say, “Ok fine. Next person.”

    ZP: Is there anything else you'd like to share? Maybe something that stuck out with a new kind of angel fundraising process in general or specifically with all the checks that you're trying to close.

    AM: Yeah. Everyone told me not to cold email. Everyone told me not to cold call investors. But I did. I closed our last 100k check with a cold call. So I wouldn't say cold calling is the worst thing you can do. Once you run out of referrals you have to cold call and sometimes you really meet the right person while doing that. So I would not advise against cold calling.

    ZP: That's good advice. cold call. OK. Well that's really good thank you.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1160901 2017-06-05T18:23:06Z 2018-02-01T08:23:50Z 2017 Seed Accelerator Rankings!

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1155014 2017-05-23T19:00:02Z 2018-02-01T08:23:50Z PRESS RELEASE: ALCHEMIST ACCELERATOR ADDS JUNIPER NETWORKS AS BACKER

    Contact: Danielle D’Agostaro                                                                                                   RELEASE: May 23, 2017

    Email: danielle@alchemistaccelerator.com


                                         ALCHEMIST ACCELERATOR ADDS JUNIPER NETWORKS AS BACKER

                                 Juniper Networks Joins Alchemist Accelerator’s Second Round Fund as Backer


    San Francisco, May 23, 2017 – Alchemist Accelerator, an accelerator dedicated to enterprise start-ups, today announced that Juniper Networks has joined Analog Devices, Cisco, Ericsson, GE, and Johnson Controls as a backer in the accelerator’s second fund. This brings the total fund to $6.5 million.

    Alchemist Accelerator is a six-month program, accepting about 20 companies every four months. On average, accepted companies receive $36,000 in seed funding. Alchemist structures the program around mentorship, sales and fundraising to help early-stage companies raise their seed or series A round and secure their first few customers.

    Many founders who have gone through the program would agree that a major perk of joining Alchemist comes from the large network of high-caliber experts and coaches who mentor Alchemist founders.

    “We are thrilled to have Juniper Networks join as a backer of Alchemist. Few companies think as deeply about next gen trends in AI, cloud, analytics, and networking – all core areas to Alchemist – as Juniper does. We are excited to have Juniper join the Alchemist family,” said Ravi Belani, Founder and Managing Director of Alchemist.

    Since the debut of Alchemist’s first class in January 2013, 14 Alchemist companies have been acquired (including Cisco’s acquisition of Assemblage and Dropbox’s acquisition of Mobilespan). More than 50 percent of its graduates have gone on to raise significant seed or institutional funding rounds. The average raise of these companies is $2.6 million. Many of these are from the top venture capital firms in the valley, including Andreessen Horowitz, Bessemer Venture Partners, Draper Fisher Jurvetson, Foundation Capital, Founders Fund, Greylock Ventures, Menlo Ventures, Redpoint Ventures, Social + Capital Partnership and True Ventures. The complete list is provided here.

    “At Juniper Networks, we believe that venture investment is an integral part of our innovation engine. Alchemist fills a gap in our portfolio strategy, acting as a vehicle to invest in seed-stage companies, a stage we are eager to participate in,” said Rita Waite, Investment Manager at Juniper Networks. “We are thrilled to be joining Alchemist Accelerator as a backer and look forward to working with Alchemist start-ups and its network.”

    Today, Alchemist held its 15th Demo Day at Juniper Networks in Sunnyvale in conjunction with the announcement. They were joined by more than 200 customers, partners and investors. The event debuted 18 companies.

    ###

     

    Learn More

    Anyone interested in getting involved as a mentor, investor or customer or members of the press, should fill out this form: https://vault.alchemistaccelerator.com/register-profile.

    For more information on the accelerator, please visit http://www.alchemistaccelerator.com/.

    About Alchemist Accelerator
    The Alchemist Accelerator is a new venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. The accelerator seeds around 60 enterprise-monetizing ventures / year. Over 50% close institutional rounds within 12 months of their Alchemist Demo Day[LM1] . 


     [LM1]I removed our boiler plate and media contacts. This is a third party release distributed by Alchemist without our ticker or a classified joint release.


    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1136436 2017-03-06T20:45:44Z 2018-02-01T08:23:50Z PRESS RELEASE: ALCHEMIST ACCELERATOR ANNOUNCES FOCUS ON INVESTMENTS IN COLLABORATION

    Contact: Danielle D’Agostaro                                                                                     RELEASE: DATE March 3, 2017

    Email: danielle@alchemistaccelerator.com

     

                                ALCHEMIST ACCELERATOR ANNOUNCES FOCUS ON INVESTMENTS IN COLLABORATION

                                                 Cisco Investments will continue as an investor in Alchemist’s new fund


    San Francisco, Calif., March 3, 2017– Today, Alchemist Accelerator announced that it will be focusing a part of its new fund on early-stage collaboration startups. This includes startups that integrate with the Cisco Spark Service or use Cisco Collaboration APIs to enable voice, video and messaging.

    Earlier this year, Alchemist Accelerator announced their new fund. Today, Cisco Investments, an existing Alchemist investor, joins the investors in Alchemist’s new fund. Cisco Investments had invested in Alchemist’s prior fund, which focused on accelerating the development of a number of seed-stage ventures. As part of that fund, Alchemist ran an Internet of Things focused accelerator that helped encourage IoT entrepreneurs and startups through funding, mentorship and resources.

    With today’s announcement, Alchemist will expand its focus and support to early-stage innovation within collaboration. Cisco Investments and Alchemist will work together to identify, invest in and develop early-stage startups that focus on enabling collaboration in the enterprise. Alchemist will also dedicate a portion of their fund to invest in early-stage startups that are part of the Cisco Spark ecosystem. Cisco is making this investment via the Cisco Spark Innovation Fund it announced last March.  Cisco Spark is the industry’s first integrated and cloud-based collaboration service. It provides users the ability to call, message, and meet, and access those services with apps, cloud-connected hardware, and a rich set of cloud APIs. These APIs, at developer.ciscospark.com, are the integration point for investments from Alchemist’s fund.

    “Our relationship with Alchemist has given us exposure to a wide variety of enterprise startups,” said Rob Salvagno, head of Cisco Investments and vice president of Cisco Corporate Development. “With this new fund, our goal will be to support a new generation of startups that are disrupting the collaboration industry by developing new features and functionality on top of Cisco Spark.”

    Alchemist already has made investments in a number of collaboration startups, including Assemblage and Synata, two companies that were acquired by Cisco.

    The Alchemist Accelerator is a six-month program, accepting about 20 companies every four months. On average, the companies that are accepted receive $36,000 in seed funding. Alchemist structures the program around mentorship, sales, and fundraising to help early-stage companies raise their Seed or Series A round and get their first few customers.

     

    ###

    Learn More

    Anyone interested in getting involved as a mentor, investor or customer or members of the press, should fill out this form: https://vault.alchemistaccelerator.com/register-profile.

    For more information on the accelerator, please visit http://www.alchemistaccelerator.com/.

    About Alchemist Accelerator 

    The Alchemist Accelerator is a new venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. The accelerator seeds around 60 enterprise-monetizing ventures / year. Over 50% close institutional rounds within 12 months of their Alchemist Demo Day. 

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1104203 2016-10-31T17:52:43Z 2018-02-01T08:23:50Z Generation IoT: The Key to Business Survival in the 21st Century


    “The only constant is change.” It’s an adage that goes back 2500 years to the Greek philosopher Heraclitus. But never has it been as true as it is today. Technology adoption is growing exponentially, driving change at a dizzying pace. Billions of devices are connecting to networks — most of them the sensors, controllers, and machines that power the Internet of Things (IoT). You probably see the rapid growth of connected devices in your own organization: on the manufacturing floor, in your logistics system, hospital or retail store. But are you seeing the corresponding business impact generated by connected processes and business models enabled by IoT?

    Over the last 25 years, organizations have had to reinvent themselves every three to seven years to keep up with the pace of change. Companies that missed one technology transition might scramble to catch up, but missing two meant a slow fade to obscurity, irrelevance, and death. Just think about the rapid evolution from records, to cassettes, to CDs — with each transition creating new winners and losers. Today, the evolution has come full circle as digital streaming services have made any kind of physical media obsolete.

    That kind of relentless change threatens the survival of many businesses. According to The Boston Consulting Group, only 19 percent of S&P 500 companies from 50 years ago are still in existence today. How can you ensure the survival of your business?

    A new generation of leaders, makers, thinkers, and doers is meeting that change with flexibility and optimism, and transforming it into opportunity. In my upcoming book, Building the Internet of Things, I call these pioneers “Generation IoT.” These are the people who see the transformational power of IoT-driven processes, business models and new revenue streams. They are eager to champion and drive these opportunities in their organizations. These people know that IoT is not just one project, one training session, one change. They know that in order to succeed they and their organizations need to adjust and re-learn, over and over again.

    Generation IoT is first defined by openness — open standards, open collaboration, open communications, and open, flexible business models. Members of Generation IoT can be found in IT or operational technology (OT). They can run the plant, or be part of the supply chain. They can be vendors, contractors, or CXOs. They can be young or old. All are willing to learn and take risks, and are good at building virtual teams internally and partnering externally. You can recognize these new winners not by their age or their titles — but by their ability to build and deploy agile, flexible business solutions.

    Here’s an example: a decade ago, visionaries talked about mass customization — building mass-produced products to each individual buyer’s specifications. But it was difficult to implement efficiently and proved to be an idea ahead of its time. Today, IoT makes this concept much more practical and cost-effective because information can be shared in real time between every element in the supply chain. Buyers can click on the components they want. Suppliers and logistics providers can see what is being ordered and adjust their scheduling accordingly. Production systems can be retooled as needed. With the information flowing up and down the supply chain, all the necessary materials are at the production line when that customer’s order is being assembled, whether it’s a car or a three-piece suit.

    With IoT, mass customization is not just a future possibility — it’s starting to happen. Daihatsu Motor Company is already using 3D printers to offer car buyers 10 colors and 15 base patterns to create their own “effect skins” for car exteriors. Each car rolls off the line customized for that individual buyer.

    The key question — and it’s the focus of both my book and this blog series — is how it’s all supposed to happen.

    Yes, vision is important. Pointing your organization toward where and how it needs to transform itself is key. But the road to realizing such vision is a multi-year, multi-phased journey and it starts with you successfully tackling one of today’s business problems. A low-risk, small project based on a well-established use-case is all that is needed to get going. Armed with the initial success, you can then pick a more complex problem and an IoT solution that will also have a bigger impact. IoT is a journey.

    Along the way, you will break down silos and build understanding and cooperation among IT, OT, supply chain and finance. You will also bring in an ecosystem of partners for a complete, converged solution. The good news is that thousands of your peers have already started on the IoT journey. Based on their experiences, a set of best practices has emerged:

    • Have a big vision, but start with a small project using one of the four fast payback scenarios I outline in my book: connected operations, remote operations, predictive analytics, and predictive maintenance.

    • Build you own business case by comparing industry benchmarks with your own total cost of ownership data.

    • Get a C-suite sponsor, because you are not implementing one IoT project, you are starting on the journey that will transform your organization, your industry, and your career.

    • Build a cross-functional team; you need complementary skills, so maximize the chances of success by building support and buy-in across your entire organization.

    Finally, recognize that we’re all relatively new at this. None of us have spent our careers on IoT — not yet. You can be an extremely valuable member of this transformation with the skills you have today. Whether you’re in Generation X, Y, or Z, you can be part of Generation IoT. Stay tuned for my next blog, where I’ll take a closer look at the four fast-payback paths to IoT.

    - Maciej Kranz, VP, Corporate Strategic Innovation, Cisco Systems

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1091926 2016-09-20T17:39:11Z 2018-02-01T08:23:49Z How to get Momentum when Fundraising


    The most powerful tool you have in closing an investor is fear of missing out (FOMO). FOMO only occurs when you have momentum in the round. Once you get that momentum, you start closing investors and a virtuous circle begins, increasing FOMO and carrying you to a great round. Here’s three ways to build momentum when you’re fundraising for your startup.

    Low Round Targets

    Setting a low round target does 2 things: first it broadens the number of investors who can participate in the round, increasing competition. Second, the round looks almost closed with even a small amount of investment. You can always increase the size of the round later as demand catches up. The only cost of this approach is creating a credible business plan for each successive target.

    For example, you only need one investor with $50k to be half full in a $100k round. Conversely, if you tell an investor you’re raising $3M and have $50k raised, the situation seems less attractive. When you start getting yeses you can increase the size of the round in stages and still have the majority raised at all times.

    Reserving Space

    You can also build momentum by getting smaller investors to earmark parts of the round. This usually comes in the form of new, angel investors and existing investors participating with their pro rata (or more). Ask the investor if they’d like to reserve a spot while they decide? If you get a verbal yes, you can’t give that space to another investor and thus more of the round is now ‘earmarked’, ‘spoken for’ or ‘wrapped up’.

    For example, say you’re raising $500k and currently have $150k committed. When talking to a new and interested investor, Investor-A, you ask their usual check size, which is $100k. Next, ask if they want you to hold that space for them while they decide, as the round is filling up. If Investor-A says ‘Yes’, then going forward you can’t offer that space to any other investors. Thus, your round is now half full.

    Maybes are worse than Noes

    One of the hardest parts of fundraising is hearing noes. Your fear of these noes can hinder momentum. All great companies get a lot of rejections during fundraising and being willing to push for a decision will actually help your process. Leaving a potential investor for weeks in the maybe column will almost certainly result in a no. Follow up regularly with updates but don’t blast everyone with fake success to push for an immediate decision.

    To avoid hassling a deciding investor without cause, your follow ups should be focused on good news. Provide updates on new investors, or reservations, in the round, customer wins and product launches. At the end of each email you can ask if they’ve decided or need anything else. Eventually, you have to give a deadline to avoid dragging out the conversation too long. Even if that leads to a ‘no’, it’s still progress.

    Hi Joe,
    Wanted to quickly share some great news, the team closed Hooli today and the contract should be signed next week. Let me know if you have any questions or if you’ve come to a decision?
    Thanks
    Ash

    Raising money for your startup is a grueling test for any founder but it gets better once you have momentum. Making use of these strategies makes it easier to get started and increases your chances of getting the round you need.

    Thanks to Duncan Davidson, Pejman Nozad, Mar Hershenson and Kaego Rust for reading drafts of this.

    Cofounder & CEO @SendHub (Cameo Global), Faculty @AlchemistAcc. Alum@YCombinator@UniofOxford. Prev: @Klout (Lithium), @OneRiot (Walmart). IG: ashrust

    Re-tweet post - 

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    tag:blog.alchemistaccelerator.com,2013:Post/1072322 2016-07-12T10:00:00Z 2018-02-01T08:23:49Z 10 Due Diligence Points When Selecting a Startup Accelerator

    Last week Samir Kanji (First Republic Bank) published a blog with a list of the accelerators ranked by graduates who received more than $750,000 in funding.  Cromwell Shubarth of the San Jose Business Journal pointed out a change in the rankings for the Alchemist Accelerator.

    Game Changers Silicon Valley had a chance to catch up with Ravi Belani and Danielle D’Agostaro from the Alchemist Accelerator a few weeks ago.  This interview, conducted for the Game Changers Silicon Valley show, as part 1 of a two part show.  Here is a 2 ½ minute segment from the interview with the Alchemist Accelerator.

    Accelerators provide an Education in Entrepreneurship

    Accelerators are very similar to educational institutions, and it is important to separate “the signal from the noise” to allow company to identify the best fit among the many accelerators.

    The Alchemist Accelerator admits only companies that monetize from the enterprise and who have established technical teams.

    A focus on the enterprise allows companies to identify customers and generate revenues from the enterprise which improves the viability of the startup.

    The classic enterprise entrepreneur is the person with 10 years of experience, although there are very disruptive companies who have never worked in the enterprise space.

    Valuable learning can be gained from the mentorship via coaches and experts, every companies has a CEO coach, a Sales Coach and Goal coach plus domain knowledge experts.

    There are five venture capital investors and five corporate investors who provided the working capital of the Alchemist Accelerator.

    Both segments of the Alchemist Accelerator can be viewed at the link for Game Changers North America

    Take-away considerations for entrepreneurs:

    Not all accelerators are created equal:

    Founding teams should review and qualify accelerator program in your geographic area.  Most of this information can be taken from blogs and articles.  Some of the areas for a general assessment should be:

    1. List the terms of the accelerator program including program duration, working capital provided, common stock contribution to the accelerator, physical work space, frequency of meetings, and training sessions such as pitch training and business plan reviews.
    2. What is the reputation and value proposition of the accelerator?  Most accelerators have a mission statement, a primary value proposition and an operating plan ( number of classes per year, number of companies per class, and a list of participating investors at their demo day)
    3. Does the accelerator have domain expertise via mentors or coaches in the markets or the technology areas being addressed by the startup?
    4. Does the accelerator do an in-depth review and qualify companies applying to join the program?
    5. What is the level of investor interest, traction and engagement with companies during the program, ideally there should be engagement well before the demo day.


    Once a startup company narrows the list of accelerator programs that would be a fit, the founders should conduct their own due diligence on the accelerator.  The following our list of starting points:

    1. Contact companies who completed the program, including both companies who received follow on funding and those who did not receive the follow up funding. Speaking with co-founders of companies who did not receive follow on fundingwill provide insights into the perceived reasons funding was not obtained as well as help verify the quality of the program.
    2. Review the alignment of the accelerator’s domain and mentor expertise to your company and the founder.
    3. Review and evaluate if the listed investors who invested in previous graduating companies are the appropriate type of investors for your company.
    4. Review the connection and relationship maintained by the accelerator with post graduate companies, can a company who has completed the program continue to draw upon the resources and advisors connected to the accelerator.  
    5. Review published videos from the demo-day presentations.  These publicly available sources provide insight into the type, status ( pre-revue, revenue) and quality of the companies in the various startup accelerators. Some accelerators have a webpage listing their demo day presentations, or do a quick search on YouTube for “accelerator_name demo day”.

    Summary

    The first decision is to determine if an accelerator will materially promote a startup company's progress both in development and execution of the business plan and engagement with potential investors. 

    Choosing the wrong accelerator can result in a disappointing experience.  All accelerators will quote metrics on the average follow-on funding received as a result of the program.  However, the average funding percentages for companies in past programs represents only one data point. Conducting additional due diligence can significantly improve your chances for the right decision as well as a successful engagement and outcome.

    For more Game Changers Silicon Valley shows: http://www.GameChangers.tv

    Facebook: Game Changers Silicon Valley

    Twitter:  GameChangersX


    Jim ConnorExecutive Producer at Game Changers Silicon Valley; Angel Investor

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    tag:blog.alchemistaccelerator.com,2013:Post/1070869 2016-07-08T02:26:59Z 2018-02-01T08:23:49Z Two Questions, One Answer

    In 2004 I published my first book, The End of Software. At the time I was the President of Oracle On Demand, so many people found it a curious title. In the book I discussed the fundamental economic reasons software should be delivered as a service. As an example of new startups in the field I highlighted four companies: VMWare, salesforce.com, Netsuite and OpenHarbor, which were all pre-IPO companies at the time. While I didn’t get all four correct, three of the four have gone on to be major companies driving the second generation of enterprise software.

    When I left Oracle, I started to wonder what was next for enterprise software. We’ve built CRM, ERP, HR, supply chain and purchasing software for on premises deployment and now all are being delivered as a cloud service. While delivery as a cloud service provides both lower cost and higher quality, the functionality has remained largely the same.

    So, are we at the end of innovation for enterprise software?

    In 2010 I started a cloud computing class at Tsinghua University in Beijing. The Amazon team was kind enough to give me $3000 worth of AWS time for the students to use. I showed up in class and told them it would buy a small server in Northern California, Virginia or Ireland for 3 ½ years. They looked bored; after all, they could also get a server in China for 3 ½ years. Or, I said, $3000 will buy you 10,000 servers for 30 minutes.

    So, what could you do with 10,000 servers for 30 minutes?

    Like you, I’ve heard the buzzword IoT for quite a few years. I mostly ignored it because I wasn’t sure why my toaster should talk to my coffee maker. But a few years ago I invited Bill Ruh, CEO of GE Digital, to deliver a guest lecture at my Stanford class and his talk raised my curiosity; so a year ago I decided I needed to learn what was going on in industrial IoT, or some would call enterprise IoT. With the help of a crowd of at least a hundred experts, I documented nearly twenty different case studies spanning all of the major industries: power, water, oil & gas, agriculture, healthcare, construction and transportation.

    Mid way through building all of these cases the answer to my two questions became obvious. While second generation enterprise software has helped reduce the cost and improve the efficiency of some enterprises it has done little to transform our physical world. With the decreasing costs of sensors, compute and storage we now have the ability to create a more precise planet. And unless we all move to Mars, we’re going to need to produce energy, water, healthcare and food more efficiently, more precisely. And if you consider that all developing  economies require fundamental infrastructure, shouldn't we engineer next generation healthcare, power, and agriculture using powerful new IoT software? In the developing economies we skipped land line telephony, will it not be possible to skip ahead in these other critical infrastructure areas?

    A few weeks ago we launched my new book: Precision: Principals, Practices and Solutions for the Internet of Things in London on the River Thames. The book is written for anyone who wants to be a student of the subject, whether you're a focused on technology or business.


    The first part of the book divides the technology principals into five major areas. We discuss the things or machines themselves, how they are connected, what is done to collect information, how you can learn from things and finally what can be done with what we’ve learned.

    While many are implementing IoT solutions using current technology, it should be recognized most of the technology to date has been built for Internet of People (IoP) applications. But things are not people. For instance, there are many more things than people, things can be where people aren’t they have more to say, things talk much more frequently and things can be programmed, people can’t. While there are numerous technology challenges and opportunities within successfully implementing industrial IoT solutions, this distinction has great relevance to those enterprises that build machines (e.g., gene sequencers, combine harvesters, wind turbines) and finally on those that use these machines (e.g. hospitals, farms and utilities).

    The second part of the book contains fourteen case studies that span the major industries of power, water, healthcare, transportation, oil & gas, construction and agriculture. You'll meet Nick August, who is a farmer on the Cotswalds, learn about how an autonomous train will run from the north of Australia to Perth this year and how you can use machine learning to predict electric grid failure.

    Some companies have already begun to make the investments in industrial IoT. GE Software, for instance, was founded in 2011 with a $1B investment. CEO Jeff Immelt has declared that GE needed to evolve into a software-and-analytics company lest its machines become commodities. Immelt has set an ambitious target of $15B in software revenue by 2020. PTC has taken an M&A path and invested over $500M in a series of companies, including ThingWorx, ColdLight and Axeda. On the venture side, you may not have noticed but Uptake, a Chicago-based IoT startup, beat Slack and Uber to become Forbes 2015's Hottest Startup. They raised $45M at a $1B post funding valuation.

    I’ll let you be the judge of whether it’s time to invest in IoT. But whether you’re a student at Berkeley, someone who works for an enterprise tech company, a venture capitalist, a CEO of a textile machine company, or the Chief Innovation Officer of a hospital, I’d encourage you to make Precision: Principals, Practices and Solutions for the Internet of Things part of your summer reading list and start exploring how you’ll be part of creating a more precision planet.


    Timothy Chou, Lecturer at Stanford University; Chairman, Alchemist IoT Accelerator; Former President of Oracle on Demand

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